Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit

Question:

Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2.
a. Graph Home’s production possibility frontier.
b. What is the of apples in terms of bananas?
c. In the absence of trade, what would the price of apples in terms of bananas be? Why?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...