Ricardian Model: Production, Trade, and Consumption in Two Countries

To graph Home's production possibility frontier (PPF), we need to plot the combination of airplanes and cars that Home can produce with its given resources.

Let's start by calculating Home's maximum production of airplanes and cars based on the given production coefficients and labor resources.

Home's maximum production of airplanes (QaH) = aLA * LA = 1 * 900 = 900 airplanes Home's maximum production of cars (QcH) = aLC * LA = 5 * 900 = 4500 cars

Now, we can plot these points on a graph, with airplanes on the x-axis and cars on the y-axis.

(900, 0) - This point represents Home producing 900 airplanes and 0 cars. (0, 4500) - This point represents Home producing 0 airplanes and 4500 cars.

Connecting these two points gives us Home's production possibility frontier (PPF).

The opportunity cost of airplanes is the amount of cars Home has to give up in order to produce one more airplane. In this case, the opportunity cost of airplanes is 5 cars (since the production coefficient of cars is 5).

In the absence of trade, the price of airplanes in terms of cars would be determined by their opportunity cost. Since the opportunity cost of airplanes is 5 cars, the price of airplanes in terms of cars would be 5.

In the absence of trade, Home would choose to produce and consume at a point on its production possibility frontier. This means Home would produce and consume a combination of airplanes and cars that lies on the PPF. The specific point would depend on the preferences of consumers and other factors not mentioned in the question.