Costa Rica and Panama both produce avocados and bananas. Each country in endowed with a specific amount of labor and has a unit labor requirement for producing each product. Costa Rica is endowed with 14,000 units of labor, and Panama is endowed with 6,000 units of labor. The unit labor requirements are given as:
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|Unit Labor Requirement for Avocados||aA=0.70||aA=0.75|
|Unit Labor Requirement for Bananas||aB=0.50||AB=0.25|
Part (i): Construct each country’s PPF. Place the quantity of avocados (measures in thousands) on the horizontal axis and the quantity of bananas (measured in thousands) on the vertical axis.
Part (ii): Which country has the comparative advantage in the production of avocados?
Part (iii): Which country has the comparative advantage in the production of bananas?