International economics
j-Display diagrammatically two countries A and B.
Identify their corresponding production and consumption points.
Use Labor along the horizontal axis and Capital along the vertical axis.
Can you identify the country having a comparative advantage?
Can you calculate the price of labor and the price of capital?
k-Use a PPF structured as a straight line.
Assume that the country has two factors of production…L and K.
The payments to the factors are:
w = wages (labor)
r = rent (capital)
Calculate:
a. The total cost of production.
b. The value of the slope.