Suppose that there are 10 million workers in Japan and that each of these workers can produce either 2 cars or 20 bushels of wheat in a year. 1. The opportunity cost of producing a car in Japan is (1/10, 5, 10, or 20) bushels of wheat, and the opportunity cost of producing a bushel of wheat in Japan is (1/10, 5, 10, or 20) cars. 2. Use the blue line (circle symbol) to draw Japan's production possibilities frontier (PPF) on the following graph. Then use the black point (plus symbol) to indicate the consumption bundle Japan can achieve without trade if it chooses to consume 15 million cars. *There is also an equilibrium symbol to be placed on the diagram as an option named (without trade) ** The diagram notes to the left Cars(millioms) numbered from 0-20 in increments of 2's. The bottom part of the graph lists Wheat (Millions of bushels) numbered 0-400 in increments of 50's. 3. Now suppose that the United States offers to buy 5 million cars from Japan in exchange for 150 million bushels of wheat. On the previous graph, use the grey point (star symbol) to indicate the consumption bundle Japan can achieve with trade if it continues to consume 15 million cars. 4. Japan ( should , or should not) accept the deal the United States proposes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that there are 10 million workers in Japan and that each of these workers can produce either 2 cars or 20 bushels of wheat in a year.

1. The opportunity cost of producing a car in Japan is (1/10, 5, 10, or 20) bushels of wheat, and the opportunity cost of producing a bushel of wheat in Japan is (1/10, 5, 10, or 20) cars.

2. Use the blue line (circle symbol) to draw Japan's production possibilities frontier (PPF) on the following graph. Then use the black point (plus symbol) to indicate the consumption bundle Japan can achieve without trade if it chooses to consume 15 million cars. ***There is also an equilibrium symbol to be placed on the diagram as an option named (without trade)

**** The diagram notes to the left Cars(millioms) numbered from 0-20 in increments of 2's. The bottom part of the graph lists Wheat (Millions of bushels) numbered 0-400 in increments of 50's.

3. Now suppose that the United States offers to buy 5 million cars from Japan in exchange for 150 million bushels of wheat.

On the previous graph, use the grey point (star symbol) to indicate the consumption bundle Japan can achieve with trade if it continues to consume 15 million cars.

4. Japan ( should , or should not) accept the deal the United States proposes.

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