France and Poland each have one worker whose monthly

3. France and Poland each have one worker whose monthly linear Production Possibility Frontier indicates the following production possibilities:

Poland France

Computers (C) 24 6

Grain (G) 4 3

a) France’s opportunity cost of G in terms of units of C equals ______ ?

b) Poland’s opportunity cost of G in terms of units of C equals ______ ?

For the following parts, please complete the questions by filling in the blank, and responding to remainder of the question:

c) Poland’s comparative advantage is in ______ because:

d) If France and Poland decide to trade, _________ will be the exporter of G while ______ will be the importer because:

e) If the economies choose to trade, the world relative price of goods must be ________ in order for trade to be mutually beneficial, because:

4. (10 points) In the following problem, assume that the UK currency is the pound sterling (PST) and the currency in the rest of the Europe is the euro (EUR).