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Suppose that Ecuador and Peru each produce only two goods, blueberries and rice. Each country in endowed with a fixed amount of labor and has
Suppose that Ecuador and Peru each produce only two goods, blueberries and rice. Each country in endowed with a fixed amount of labor and has a unit labor requirement for producing each product. The figure below depicts each country's PPF. PPF is the Ecuador's PPF, and PPFp is Peru's PPF. Quantity of Rice [in thousands of pounds) 50 40 20 PPF 10 PPF - -. To 20 30 40 50 60 70 Quantity of Blueberries (in thousands of pounds) Part ((): Suppose that Ecuador specializes in the production of blueberries. How many blueberries can Ecuador produce? Part (ii): Suppose that Peru specializes in the production of blueberries. How many blueberries can Peru produce? Part (iii): Which country has the absolute advantage in the production of blueberries? Part (iv): Which country has the absolute advantage in the production of steel? Part (v): Which country has the comparative advantage in the production of blueberries? Part (vi): Which country has the comparative advantage in the production of rice
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