4. Problems and Applications Q4

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.

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.

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.

20 O PPF 16 .+ Without Trade 12 Cars (millions) With Trade 50 100 150 200 250 300 350 400 Wheat (millions of bushels)