Home has $1,200$ units of labour availableand Foreign has $800$ units of labour available: The unit labour requirements of the production of tomatoes arid potatoes are $2$ and $3$ in Home, and $1$ and $5$ in Foreign respecively. Suppose the world reptive demiand takes the following fornDemand for.tomatoes$/$Demand for potatoes, $0,5$ Frice of potatoes$/$ Price of tomatoes.

$($i$)$ Graph the production possibility Frontier of Hom$$ and ForeignGID Construct the world relative supply curve.

(ii) Git What is the equilibnum relative price of tot$$toes$?$ 

Answer rating: 100% (QA)

To solve this problem well start by graphing the production possibility frontiers PPFs for both Home and Foreign Then well construct the world relativ... View the full answer