production possibilities frontiers for the U.S. and Mexico
There are 2 countries, the U.S. and Mexico, that produce 2 goods, manufacturing and agriculture. Manufacturing output in the U.S. is a function of labor and capital inputs. Agriculture output in the U.S. is a function of labor inputs only.
Manufacturing output in Mexico is a function of labor input only. Agriculture output in Mexico is a function of labor and capital.
Manufacturing is capital intensive and agriculture is labor intensive. The U.S. is relatively more capital abundant.
My problem: What do the production possibilities frontiers for the U.S. and Mexico look like?
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Hello,
I cannot draw a graph in this box; however, I can explain the concepts. Because labor is the only input that both commodities share for both countries the PPF curve would still be a curve, which indicates the diminishing ...
Solution Summary
What the production possibilities frontiers for the U.S. and Mexico look like are determined.