Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150. Graph Foreign’s PPF.

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A:

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A: a)

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.