Problem
1. "If U.S. productivity growth does not keep up with that of its trading partners, the United States will quickly lose its international competitiveness and not be able to export any products, and its standard of living will fall." Critically evaluate this statement in light of what you have learned in this chapter.
2. Suppose that country A and country B both have the same amount of resources and that country A has an absolute advantage in both steel and wheat and a comparative advantage in steel production. Draw production-possibilities frontiers for countries A and B (on the same graph) that reflect these characteristics, and explain why you drew them in the manner you did.