Homework SourseTable 1 Production Possibilities for the US and Japan a Usin
Table 1. Production Possibilities for the US and Japan.
a) Using the information in Table 1, draw each country’s Production Possibilities Frontier
(PPF), and calculate each country’s opportunity cost of producing cars and computers.b) Using your results in (a), determine which country should specialize in the production ofcars and which should specialize in the production of computers, and how the twocountries can trade
Answer:
a) Production Possibilities Frontiers for:
US and Japan
Opportunity Costs Opportunity
b) Which country should specialize in Computers? __________________________
Which country should specialize in cars? _______________________________How should they trade?
please i need help asap.
| Computers | Cars | |
| US | 100 | 50 |
| Japan | 50 | 40 |
Solution
Production Possibilities Frontier (PPF):
Opportunity Cost:
Country
opportunity cost of computers in terms of cars
opportunity cost of cars in terms of computer
US
50 Computers = 100 Cars, 2times
100 Cars = 50 Computers, 0.5 times
Japan
50 Computers = 40 Cars, 1.25times
40 Cars = 50 Computers, 0.8 times
b) Which country should specialize in Computers? JAPAN
Which country should specialize in cars? US.
How should they trade?: Japan can export Computers to US and US can exports Cars to Japan and have a win-win strategy.
| Country | opportunity cost of computers in terms of cars | opportunity cost of cars in terms of computer |
| US | 50 Computers = 100 Cars, 2times | 100 Cars = 50 Computers, 0.5 times |
| Japan | 50 Computers = 40 Cars, 1.25times | 40 Cars = 50 Computers, 0.8 times |
