Suppose there are two countries: Japan and the United States, producing two goods, x- ray machines...

Suppose there are two countries: Japan and the United States, producing two goods, x- ray machines (x) and yucca plants (y). The following table shows the amount of labor inputs needed to make one unit of output of each of the two commodities in each of the two countries. Suppose Japan has 48 million workers and the United States has 24 million workers.

	x-ray	yucca
Japan	12	6
US	2	8

a.) (6 points) Graph the production possibility frontier (PPF) for each country. Which country has the comparative advantage in producing x-ray machines?

Expert Solution

Answer to the following question:

Japan has 48 m worker and the US has 24 m worker. So, given this information, the maximum of X-ray machine and yucca that the US and Japan can produce is given below.

1 unit of yucca requires 6 labour force in Japan. So, Using 48 m of labour force the Japan can produce maximum of (48/6)=8 million yucca plants.

And 1 unit of yucca requires 8 labour force in UC. Using 24 m of labour force the US can produce maximum of (24/8)=3 million yucca plants.

1 unit of X-ray machine production requires 12 labour force in Japan. So, Using 48 m of labour force the Japan can produce maximum of (48/12)=4 million X-ray machines.

1 unit of X-ray machine production requires 2 labour force in US. So, Using 24 m of labour force the US can produce maximum of (24/2)=12 million X-ray machines.

In the following image the PPF of Japan is shown:

In the following image the PPF of US is shown:

Seeing these two PPF we can conslude that the US has an absolute as well as the comparative advantage in the production and export of the X-ray machines. Whereas the Japan has an absolute as well as the comparative advantage in the production and export of the Yucca plants. Since Japan can produce more of yucca plants using less of labour force than that of the US. And US can produce more of X-ray machines using less of labour force than that of the Japan.

Hope, I solved your query. Give good feedback.

Comment, I'll get back to you ASAP.

Stay safe. Thank you.

Rahul Sunny answered 2 years ago

Consider two countries, the United States (U.S.) and Japan. In the U.S., there are two firms,...

Consider two countries, the United States (U.S.) and Japan. In the U.S., there are two firms, Pikes Peak Steel (PPS) and General Motors (GM), both owned by U.S. citizens. In Japan, there is one firm, Toyota, owned by Japanese citizens. All of the employees of PPS and GM are U.S. citizens and all of the employees of Toyota are Japanese citizens. In a given year, PPS produces $6000 worth of steel and pays wages of $1500. It sells $2000 worth...

1.) Draw graphs representing autarky for two countries, China and Japan, producing two goods, automobiles (A)...

1.) Draw graphs representing autarky for two countries, China and Japan, producing two goods, automobiles (A) and smart TVs (S), where both countries are using capital (K) and labor (L) to produce both goods with identical technologies. Suppose smart TV production is relatively labor-intensive and autoproduction is relatively capital-intensive, and China has a relative abundance of labor and Japan has a relative abundance of capital. Show the autarkic equilibrium for each country. Specify who has the lower and higher price-ratios...

Suppose there are two countries in the world: Canada and the United States. Power plants in...

Suppose there are two countries in the world: Canada and the United States. Power plants in the United States mid-west burning high-sulphur coal contributes to the acidification of lakes in Canada. Explain by using a diagram, if the two countries do nothing to reduce pollution, then there is a loss in economic efficiency.

The United States has a low trade level compared to a country like Japan. If countries...

The United States has a low trade level compared to a country like Japan. If countries could not trade, what would happen to the living standards in those countries with low trade levels, like the United States, as well as in countries with high trade levels such as Japan? Cite at least one current example in your discussion.

Assume there are two countries, Australia and Japan, each produces a similar basket of goods and...

Assume there are two countries, Australia and Japan, each produces a similar basket of goods and services. Suppose the price of this basket of goods and services in Australia is AU$500 and the price of the same basket of goods and services in Japan is ¥ 50000. Calculate the following: (a) According to PPP theory, calculate the dollar/yen and yen/dollar spot exchange rate. (b) Suppose over the next 12 months the price of the basket is expected to rise to...

Consider a Heckscher-Ohlin world with two countries (Japan and Ireland), two goods (Cameras and Linen), and...

Consider a Heckscher-Ohlin world with two countries (Japan and Ireland), two goods (Cameras and Linen), and two factors of production (labor(L) and capital(K)). Both factors of production are used in the production of each of these goods. Suppose the K/L ratio used to make linen is less than the K/L ratio used to make cameras. Also, the ratio of total capital to labor in the economy is higher in Japan than Ireland. Assume that Japan and Ireland have the same...

Suppose there are two countries, USA and Japan. USA is regarded as the home country and...

Suppose there are two countries, USA and Japan. USA is regarded as the home country and Japan is the foreign country. USA has 100 units of labor available and Japan has 80 units of labor. Both countries can produce only two goods, airplanes and cars. The output per hour of labor in the production of airplanes in the USA is 12, while in car production the output per hour of labor is 6. In Japan, the output per hour of...

Assume that there are exactly two countries: The United States and Australia. Also assume that these...

Assume that there are exactly two countries: The United States and Australia. Also assume that these countries’ economies are closed (i.e. they do not trade or otherwise interact with each other) with one notable exception: The U.S. exports plastic to Australia, and Australia exports iron ore to the U.S. For this question, I will abbreviate the currency of the U.S. as USD and that of Australia as AUD. a.Suppose that the U.S. imports 100,000 tons of iron at a price...

Suppose two countries have the same productivity per person for Goods X and Y. What would...

Suppose two countries have the same productivity per person for Goods X and Y. What would cause them to have trade in Goods X and Y?

compare and contrast the fertility and mortality rates of Japan and the United States

Question