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Suppose that each worker in Home can produce 2 pound of cheese or 3 gallons of wine. Assume that Home has 40 workers.

a. Graph the production possibilities frontier (PPF) for Home? What is the no-trade relative price of cheese in Home? Why?

b. Suppose that each worker in Foreign can produce 1 pounds of cheese or 2 gallons of wine. Assume that Foreign also has 40 workers. Graph the PPF for Foreign? What is the no-trade relative price of cheese in Foreign?

c. In which good does Foreign have a comparative advantage, and why?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92234783

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