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Consider the single-factor production lnction, Y = Z L, for Island A and B. Each island has 50 units of labor (cannot move across islands).
Consider the single-factor production lnction, Y = Z L, for Island A and B. Each island has 50 units of labor (cannot move across islands). Island A can produce one unit of agricultural product for 5 units of labor and produce one unit of electronic product for 10 units of labor (i.e. Z :14 = g and Z 5' = i). Island B can produce one unit of agricultural product for 5 units of labor and produce one unit of electronic product for 20 units of labor (i.e. Z 5 = g and Z 5 = 5). People must consume both goods (for example, if no agricultural product is produced, its price will go to innity). Assume the two islands can trade with each other with no cost. (30 points) a) Please draw a graph to depict their production possibilities between the two goods. (5 points)
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