In class we built a Production Possibility Frontier (PPF) where each sector exhibits constant returns to scale technology and where sectors use die rent capital-labor ratio. Suppose now that both sectors exhibit increasing returns to scale.
(i) Provide a dentition.
(ii) Build the production possibility frontier for a two sector economy by using the same technique as in class (i.e. with the use of an Edge worth box) and by assuming that the two sectors use the same technology. Explain your answer.
(iii) Do the same as in (ii) when the two sectors use deferent technologies. Explain your answer.