Question

Table 3-10 Assume that Japan and Korea can switch between producing cars and producing air rate. Quantity Produced in 2400 Hours Hours Needed to Make 1 Car Airplane 30 150 50 150 Airplane 16 Japan Korea Draw a production possibilities frontier for both Korea and Japan assuming 2400 production hours available. What is the opportunity cost of each country to produce each cost? What country has a comparative advantage in the production of cars? What country has a comparative advantage in the production of airplanes? If the two countries were to engage in mutually beneficial trade, which country would export each good? What would the price of trade have to be in order for it to be mutually beneficial?

Answer 1

korens Por Japan's por 80 Cas is opportunity cost ach producing cans - 300 20 - 0.2 croplanes. & of airplanes - 150 = 65 ca koree's of portunity cost of producing cars = 50 e = 0.33 airplanes & of aisplanes = 150 = 3 cars. - 50 Japan has a comparative advantage in cars & korea has a comparative advantage in airplanes Japan will expost cass & korea will export airplanes. Terms of trade should in between 3 cars & Scars for each airplane. For example: 4 Lass for 1 arsplane