Question
Both the U.S. and Mexico only need labor to produce computers and beer. Suppose that workers in the U.S. need 5 hours to assemble a
Both the U.S. and Mexico only need labor to produce computers and beer. Suppose that workers in the U.S. need 5 hours to assemble a computer and 2 hours to produce one case of beer, while workers in Mexico need 10 hours to assemble a computer and 1 hour to produce one case of beer. The U.S. has 10 million labor hours available to use in production each month. Mexico also has 10 million labor hours available for production per month. For simplicity, assume that opportunity costs are constant for both countries. i. Plot the Production Possibilities Frontier (PPF) of the U.S. and Mexico for computers and beers. Place computers in the horizontal axis for both countries. Make sure you mark clearly the x-intercept and y-intercept for each PPF in your graphs. Be consistent using units of account. What is the opportunity cost of producing one computer for the U.S.? And for Mexico? What is the opportunity cost of producing one case of beer for the U.S.? And for Mexico?
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