Question: Trade and PPF 1. Using information form the table below, graph the two production possibilities curves below. US Japan Production Table Food Machinery Food

Trade and PPF 1. Using information form the table below, graph the two production possibilities curves below. US Japan Production Table Food Machinery Food (in tons) (in units of 1000) (in tons) Machinery (in units of 1000) 10 0 12.5 0 8 5 10.0 1 6 10 7.5 2 4 15 5.0 3 2 20 25 0 25 0.0 4 5 2. Which country has the absolute advantage in machinery? Food? EXPLAIN HOW YOU KNOW. 3. Which country has the comparative advantage in machinery? Food? EXPLAIN HOW YOU KNOW. 4. Using your graph from #1, demonstrate how the US and Japan would be better off specializing according to their comparative advantages and trading rather than producing both food and machinery for themselves. EXPLAIN WHAT YOU DID ON THE GRAPH.

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