Suppose Latvia and Estonia each produce only two goods, tractors and bobsleds. Both are produced using labor alone. Assuming both countries are at full employment, you are given the following information: Latvia: 20 units of labor required to produce 1 tractor 8 units of labor required to produce 1 bobsled Total labor force: 1,000,000 units Estonia: 15 units of labor required to produce 1 tractor 30 units of labor required to produce 1 bobsled Total labor force: 750,000 units Draw the production possibility frontiers for each country in the absence of trade. 1.) Using the line drawing tool, draw the production possibility frontier for Latvia. Properly label your line. 2.) Using the line drawing tool, draw the production possibility frontier for Estonia. Properly label your line. Carefully follow the instructions above and only draw the required objects. If transportation costs are ignored and trade is allowed, Estonia and Latvia will not engage in trade. If a trade agreement is negotiated, at what rate (number of bobsleds per tractor) would they agree to exchange? Latvia and Estonia would be willing to exchange between (Round your responses to two decimal places.) and bobsleds for one tractor.
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Suppose Latvia and Estonia each produce only two goods, tractors and bobsleds. Both are produced using labor alone. Assuming both countries are at full employment, you are given the following information:
Latvia:
20 units of labor required to produce 1 tractor 8 units of labor required to produce 1 bobsled Total labor force: 1,000,000 units
Estonia:
15 units of labor required to produce 1 tractor
30 units of labor required to produce 1 bobsled
Total labor force: 750,000 units
Draw the production possibility frontiers for each country in the absence of trade. 1.) Using the line drawing tool, draw the production possibility frontier for Latvia. Properly label
your line.
2.) Using the line drawing tool, draw the production possibility frontier for Estonia. Properly label your line.
Carefully follow the instructions above and only draw the required objects.
If transportation costs are ignored and trade is allowed, Estonia and Latvia will not engage in trade.
If a trade agreement is negotiated, at what rate (number of bobsleds per tractor) would they agree to exchange?
Latvia and Estonia would be willing to exchange between
(Round your responses to two decimal places.)
and
bobsleds for one tractor.
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