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              BICYCLES            SKATEBOARDS       HOME         &

              BICYCLES

           SKATEBOARDS

      HOME

                  5(hrs)

                     2(hrs)

      FOREIGN

                  3(hrs)

                     3(hrs)

HOME has 1000 hours of labour available.

FOREIGN has 1200 hours of labour available.

Trade is said to make each country better off by enlarging the range of consumption choices available to residents. Compare the consumption possibilities available to Home and Foreign consumers in the closed economy and open/trading economy cases. Graph the expanded consumption opportunities. The relative price of skateboards in terms of bicycles under free trade is 4/5.

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