Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page 10Page 11Page 12Page 13REVIEW 3.1 (COLUMBIAN PPF)In Columbia, producing one pound of coffee requires 1 unit oflabor, while producing one bottle of wine requires 4 units of labor. In France, producing one pound of coffee requires 2 units oflabor, while producing one bottle of wine requires 1 unit of labor. a. Construct the Columbian production possibilities frontier forlabor supply L = 240.b. Determine the maximum Columbian coffee production.c. Determine the maximum Columbian wine production.d. Find Columbia’s opportunity cost of coffee in terms of wine.REVIEW 3.2 (FRENCH PPF)a. Construct the French production possibilities frontier for laborsupply L* = 120.b. Determine the maximum French coffee production.c. Determine the maximum French wine production.d. Find France’s opportunity cost of coffee in terms of wine.e. Compare the slopes of the Columbian and French PPFs. Which is steeper and why?REVIEW 3.3 (WORLD EQUILIBRIUM) a. What relative price of coffee to wine is required to haveColumbia produce both coffee and wine?b. What relative price of coffee to wine is required to haveFrance produce both coffee and wine?c. What is the World relative supply of coffee to wine if bothcountries specialize in their comparative advantage good?d. Construct world relative supply.WCe. Graph world relative demand for coffee to wine RD = P /P .f. Find the equilibrium relative price of coffee to wine underfree trade.g. Compare the free trade relative price to each country’sautarky relative price.h. Determine each country’s optimal production bundle underfree trade.REVIEW 3-4a (COLUMBIAN TPF)a. Construct Columbia’s trade possibilities frontier.b. Determine the maximum Columbian coffee consumption.c. Determine the maximum Columbian wine consumption.d. What is the slope of Columbia’s TPF?REVIEW 3-4b (FRENCH TPF)e. Construct France’s trade possibilities frontier.f. Determine the maximum French coffee consumption.g. Determine the maximum French wine consumption.h. Compare the slopes of the Columbian and French TPFs andexplain.REVIEW 3.1 SOLUTION (COLUMBIAN PPF)In Columbia, producing one pound of coffee requires 1 unit oflabor, while producing one bottle of wine requires 4 units of labor. In France, producing one pound of coffee requires 2 units oflabor, while producing one bottle of wine requires 1 unit of labor. a. Construct the Columbian production possibilities frontier forlabor supply L = 240.b. Determine the maximum Columbian coffee production.c. Determine the maximum Columbian wine production.d. Find Columbia’s opportunity cost of coffee in terms of wine.REVIEW 3.2 SOLUTION (FRENCH PPF)a. Construct the French production possibilities frontier for laborsupply L* = 120.b. Determine the maximum French coffee production.c. Determine the maximum French wine production.d. Find France’s opportunity cost of coffee in terms of wine.e. Compare the slopes of the Columbian and French PPFs.Which is steeper and why?The slope of the French PPF (-2) is steeper than the slope ofthe Columbian PPF (-1/4), as France has a largeropportunity cost of coffee in terms of wine than Columbia.REVIEW 3.3 SOLUTION (WORLD EQUILIBRIUM) a. What relative price of coffee to wine is required to haveColumbia produce both coffee and wine?b. What relative price of coffee to wine is required to haveFrance produce both coffee and wine?c. What is the World relative supply of coffee to wine if bothcountries specialize in their comparative advantage good?d. Construct world relative supply.WCe. Graph world relative demand for coffee to wine RD = P /P .CW WCP /P RD = P /P RS1/4 4 0 ... 21/2 2 22 1/2 2 ... 4f. Find the equilibrium relative price of coffee to wine underfree trade.g. Compare the free trade relative price to each country’sautarky relative price.The free trade relative price of coffee to wine of 1/2 is higherthan the Columbian autarky price of 1/4 and lower than theFrench autarky price of 2.h. Determine each country’s optimal production bundle underfree trade.Columbia specializes in coffee and France specializes inwine.REVIEW 3-4a SOLUTION (COLUMBIAN TPF)a. Construct Columbia’s trade possibilities frontier.b. Determine the maximum Columbian coffee consumption.c. Determine the maximum Columbian wine consumption.d. What is the slope of Columbia’s TPF?The (negative of the) free trade relative price of coffee.REVIEW 3-4b SOLUTION (FRENCH TPF)e. Construct France’s trade possibilities frontier.f. Determine the maximum French coffee consumption.g. Determine the maximum French wine consumption.h. Compare the slopes of the Columbian and French TPFs andexplain.The two slopes are the same as the countries both face thesame free trade relative price of coffee in terms of wine.0 60 120 0 60 120 180 240 Coffee (pounds)Review 3.1 Columbian PPF0 60 120 0 60 120 180 240 Coffee (pounds)Review 3.2 French PPF0 2.25 0 2 4 Relative Quantity of Coffee to WineReview 3.3 World RS & RD0.50.50.252RSRD0 60 120 0 60 120 180 240 Coffee (pounds)Review 3.4 Columbian TPFTPFPPF0 60 120 0 60 120 180 240 Coffee (pounds)Review 3.4* French