Suppose there are two goods: Food (F) and manufactures (M) that both need capital (K) and labor (L) as input factors. Denote QF as the output of food and QM as the output of manufactures. KF and LF are the amounts of capital and labor respectively used in the food sector while KM and LM are the amount of capital and labor used in the manufactures sector. Units of capital and labor respectively needed to produce one unit of food are given by KF = 1 and LF = 2. Units of capital and labor respectively needed to produce one unit of manufactures are given by KM = 3 and LM = 1. There are two countries in the world: "Europe" (E) and "Africa" (A). The two countries have the same preferences and the same technology. In Europe, total amounts of labor and capital respectively are given by LE = 400 and KE = 900. In Africa, total amounts of labor and capital are given by LA = 800 and KA = 450.

a) Which country is relatively capital abundant, which country is relatively labor abundant? Which good is relatively capital intensive, which is relatively labor intensive?

b) Draw the PPFs for both countries (draw M on the X-axis and F on the Y-axis).