Suppose three countries were self sufficient and produced along a straight line production possibility curve. The maximum amounts of clothing and cars each can produce by using all of its resources are as follows:
Canada Mexico United States
Clothing 6 15 30
Cars 20 20 30
What is the cost of a car, expressed in terms of clothing, in each country? Which is the low cost producer of cars?
b)Draw the world'd production possibility curve if the three countries find themselves in an open economy.