Suppose Latvia and Estonia each produce only two goods, tractors and bobsleds. Both are produced using labor alone. Assuming both countries are at full employment, you are given the following information: Latvia: 10 units of labor required to produce 1 tractor 5 units of labor required to produce 1 bobsled Total labor force: 1,000,000 units Estonia: 15 units of labor required to produce 1 tractor 10 units of labor required to produce 1 bobsled Total labor force: 750,000 units Draw the production possibility frontiers for each country in the absence of trade. 1.) Using the line drawing tool, draw the production possibility frontier for Latvia. Properly label your line. 2.) Using the line drawing tool, draw the production possibility frontier for Estonia. Properly label your line. Carefully follow the instructions above and only draw the required objects. If transportation costs are ignored and trade is allowed, Estonia and Latvia will engage in trade. If a trade agreement is negotiated, at what rate (number of bobsleds per tractor) would they agree to exchange? Latvia and Estonia would be willing to exchange between 0.50 and 1.25 bobsleds for one tractor. (Round your responses to two decimal places.) Bobsleds (thousands) 250- Q 225- 200- ☑ 175- 150- 125 100- 75 50- 25 0+ 0 10 20 30 40 50 60 70 80 90 100 110 120 Tractors (thousands)
Suppose Latvia and Estonia each produce only two goods, tractors and bobsleds. Both are produced using labor alone. Assuming both countries are at full employment, you are given the following information: Latvia: 10 units of labor required to produce 1 tractor 5 units of labor required to produce 1 bobsled Total labor force: 1,000,000 units Estonia: 15 units of labor required to produce 1 tractor 10 units of labor required to produce 1 bobsled Total labor force: 750,000 units Draw the production possibility frontiers for each country in the absence of trade. 1.) Using the line drawing tool, draw the production possibility frontier for Latvia. Properly label your line. 2.) Using the line drawing tool, draw the production possibility frontier for Estonia. Properly label your line. Carefully follow the instructions above and only draw the required objects. If transportation costs are ignored and trade is allowed, Estonia and Latvia will engage in trade. If a trade agreement is negotiated, at what rate (number of bobsleds per tractor) would they agree to exchange? Latvia and Estonia would be willing to exchange between 0.50 and 1.25 bobsleds for one tractor. (Round your responses to two decimal places.) Bobsleds (thousands) 250- Q 225- 200- ☑ 175- 150- 125 100- 75 50- 25 0+ 0 10 20 30 40 50 60 70 80 90 100 110 120 Tractors (thousands)
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter25: The Keynesian Perspective
Section: Chapter Questions
Problem 17CTQ: In its recent report, The Conference Boards Global Economic Outlook 2015, updated November 2014...
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Transcribed Image Text:Suppose Latvia and Estonia each produce only two goods, tractors and bobsleds. Both are produced using labor alone.
Assuming both countries are at full employment, you are given the following information:
Latvia:
10 units of labor required to produce 1 tractor
5 units of labor required to produce 1 bobsled
Total labor force: 1,000,000 units
Estonia:
15 units of labor required to produce 1 tractor
10 units of labor required to produce 1 bobsled
Total labor force: 750,000 units
Draw the production possibility frontiers for each country in the absence of trade.
1.) Using the line drawing tool, draw the production possibility frontier for Latvia. Properly label your line.
2.) Using the line drawing tool, draw the production possibility frontier for Estonia. Properly label your line.
Carefully follow the instructions above and only draw the required objects.
If transportation costs are ignored and trade is allowed, Estonia and Latvia will
engage in trade.
If a trade agreement is negotiated, at what rate (number of bobsleds per tractor) would they agree to exchange?
Latvia and Estonia would be willing to exchange between 0.50 and 1.25 bobsleds for one tractor. (Round your responses
to two decimal places.)
Bobsleds (thousands)
250-
Q
225-
200-
☑
175-
150-
125
100-
75
50-
25
0+
0
10 20 30 40 50 60 70 80 90 100 110 120
Tractors (thousands)
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