hour. To plot the frontier, plot the end points and connect them with a line. For example, Japan can produce 6 units of steel with its worker or 3 televisions. It can also allocate 1/2 hour to the production of each and get 3 units of steel and 1 1/2 televisions. What are the opportunity cost of a television in Japan and Korea? What are the opportunity cost of steel in Japan and Korea? Which country has a comparative advantage in television production or steel production? What is the range of prices at which each country would be willing to exchange?
1.Suppose we have the following information about the productivity of industry in
Japan and Korea. The data are the units of output per hour of work.
Steel Televisions
Japan 6 3
Korea 8 2
A Japanese worker can produce 6 units of steel or 3 televisions per hour. A Korean worker
can produce 8 units of steel or 2 televisions per hour. Plot the
for each country, assuming each country has only one worker and the worker works only one
hour. To plot the frontier, plot the end points and connect them with a line. For example, Japan
can produce 6 units of steel with its worker or 3 televisions. It can also allocate 1/2 hour to
the production of each and get 3 units of steel and 1 1/2 televisions.
What are the
What are the opportunity cost of steel in Japan and Korea?
Which country has a
What is the range of prices at which each country would be willing to exchange?
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