The PPF between avocados and bananas for Ecuador (PPFE) and…
The PPF between avocados and bananas for Ecuador (PPFE) and Mexico (PPFM) is depicted below. Each PPF demonstrates the productive capabilities of each country with respect to these two goods. Part (i): Identify the opportunity cost of producing an additional unit of each good in Ecuador. Clearly indicate which opportunity cost refers to each good. Part (ii): Identify the opportunity cost of producing an additional unit of each good in Mexico. Clearly indicate which opportunity cost refers to each good. Part (iii): Which country has a comparative advantage in producing avocados? Which country has a comparative advantage in producing bananas? Part (iv): Suppose that the unit-labor requirement for producing an additional avocado is aA=0.08 in Mexico. How many units of labor are available in Mexico? Part (v): If the unit-labor requirement for producing an additional avocado is aA=0.08 in Mexico, what must be the unit-labor requirement for producing an additional banana in Mexico? Hint: Answering this question is made easier by using some of your previous calculations.