Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150.Graph Foreign’s PPF.Construct the world relative supply curve of banana. What will happen if ?Graph the relative demand curve along with the relative supply curve of banana.Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples What is the equilibrium relative price of banana? 1. Home has 12,000 units of labor available. It can produce two goods, apples andbananas. The unit labor requirement in apple production is 100, while in bananaproduction is 75. There is now also another country, Foreign, with a labor force of18,000. Foreign's unit labor requirement in apple production is 120, while in bananaproduction is 150.a. Graph Foreign's PPF.b. Construct the world relative supply curve of banana. What will happen ifРАРвc. Graph the relative demand curve along with the relative supply curve of banana.Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples1Pb11PbHint:**QB 2 Pa2 PaWhat is the equilibrium relative price of banana?d. If w = 2w*, what goods should Home produce? What should Foreign produce?Explain.H IN

Demand is the desire backed by a willingness to pay and the ability to pay by an individual. The…

Answered: Home has 12,000 units of labor…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150.
Graph Foreign’s PPF.
Construct the world relative supply curve of banana. What will happen if ?
Graph the relative demand curve along with the relative supply curve of banana.

Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples

What is the equilibrium relative price of banana?

1. Home has 12,000 units of labor available. It can produce two goods, apples and
bananas. The unit labor requirement in apple production is 100, while in banana
production is 75. There is now also another country, Foreign, with a labor force of
18,000. Foreign's unit labor requirement in apple production is 120, while in banana
production is 150.
a. Graph Foreign's PPF.
b. Construct the world relative supply curve of banana. What will happen if
РА
Рв
c. Graph the relative demand curve along with the relative supply curve of banana.
Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples
1
Pb
1
1
Pb
Hint:
*
*
QB 2 Pa
2 Pa
What is the equilibrium relative price of banana?
d. If w = 2w*, what goods should Home produce? What should Foreign produce?
Explain.
H IN

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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