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Consider the two island countries of Sodor and the Isle of Mann. Both countries have linear...

  1. Consider the two island countries of Sodor and the Isle of Mann. Both countries have linear production possibility frontiers and have 1000 workers. Further each country is capable of producing, and consuming both Trains and Agricultural goods. The costs of production for each country are displayed below in terms of how many workers are needed to produce each good.

Trains(L/Train)

Agriculture(L/Kg)

Sodor

6

2

Isle of Mann

20

4

  1. Graph the PPF (assuming linearity) for each region. Be sure to fully label.
  2. Identify the direction of trade for each good.
  3. Identify a price range in terms of (KG/Train) in which we would trade.

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
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