Chapter 3: In-Class Exercise

Instructor: Protika Bhattacharjee

Question
• Consider two countries: USA and Brazil. USA has 1200 units of labor and Brazil has
800 units of labor. USA can produce two goods apples and bananas. The unit labor
requirement for USA for apple production is 3, while for banana production is 2.
Brazil’s unit labor requirement for apple production is 5, and for banana production is
1.
1. Graph USA and Brazil’s PPFs. Show the intercepts of the PPF and how you
calculated it. Put banana on the vertical axis and apple on the horizontal axis. (7
points)
2. Find the opportunity cost of slope of the PPF. (3 points)