1. Two nations have straight line production possibility frontiers, but with different slopes. Using a graph and an accompanying written explanation, explain why complete specialization maximizes the gains from trade between these two countries.
2. On a set of axes, draw a single concave production frontier with two different community indifference curves tangent to the single production frontier, on the assunption that two nations are identical in production but have different tastes. Indicate on your figure the autarky equilbrium relative commodtity price in each nation and show the process of specialization in production and mutually beneficial trade.