Assume that corn production requires only land and can production requires only labor. The United States can produce either 70 kilograms of corn or 100 cans in an hour. Mexico can produce either 60 kilograms of corn or 20 cans in an hour. If the supply of labor increases in the United States, what will happen to the U.S. production possibilities frontier?
Answer
a. The PPF will expand outward, but in a biased manner.
b. The PPF will contract evenly.
c. The PPF will expand outward, evenly.
d. A change to a resource will not shift the PPF in the Heckscher-Ohlin model.