1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. a) Complete the following table with the number of workers needed to make one car or one ton of grain in Germany and Japan Germany Japan 1/5 1/4 Workers Needed to make 1 Car 1/10 1/5 1 Ton of Grain b) Graph the production possibilities frontier (PPF) for German economy as well as the PPF for Japanese economy in the same graph. Carefully label and identify the endpoint in your graphs. c) Given all the information above, which country has an absolute advantage in producing cars? Which country has an absolute advantage in producing grain. Why?
1. One German worker can produce either 5 cars or 10 tons of grain a year. One Japanese worker can produce either 4 cars or 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. a) Complete the following table with the number of workers needed to make one car or one ton of grain in Germany and Japan Germany Japan 1/5 1/4 Workers Needed to make 1 Car 1/10 1/5 1 Ton of Grain b) Graph the production possibilities frontier (PPF) for German economy as well as the PPF for Japanese economy in the same graph. Carefully label and identify the endpoint in your graphs. c) Given all the information above, which country has an absolute advantage in producing cars? Which country has an absolute advantage in producing grain. Why?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 35P: If trade increases world GDP by 1 per year, what is the global impact of this increase over 10...
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