Elucidate Canadian opportunity cost also production possibilities frontier with diagrams.
Suppose which there are 10 million workers in Canada also which every worker can produce either 2 cars or 30 tonnes of wheat in a yr.
(a) Illustrate what is the opportunity cost of producing a car in Canada? Illustrate what is the opportunity cost of producing a tonne of wheat in Canada? Elucidate the relationship between the opportunity costs of the two goods.
(b) Draw Canada's production possibilities frontier. If Canada chooses to consume 10 million cars, explain how much wheat can it consume without trade? Label this point on the production possibilities frontier.
(c) Suppose which the United States offers to buy 10 million cars from Canada in exchange for 20 tonnes of wheat per car. If Canada continues to consume 10 million cars, explain how much wheat does this deal allow Canada to consume? Label this point on your diagram. Should Canada accept the deal?