广东外语外贸大学《新编国际贸易》03Answers to Textbook Problems.docVIP

Answers to Textbook Problems 1. a. The production possibility curve is a straight line that intercepts the apple axis at 400(1200/3) and the banana axis at 600(1200/2). b. The opportunity cost of apples in terms of bananas is 3/2. It takes three units of labor to harvest an apple but only two units of labor to harvest a banana. If one foregoes harvesting an apple, this frees up three units of labor. These 3 units of labor could then be used to harvest 1.5 bananas. c. Labor mobility ensures a common wage in each sector and competition ensures the price of goods equals their cost of production.