Description
Use the following data: The USA can produce 5,000 bushels of wheat (and zero computers) or 500 computers (and zero wheat) using its worker and capital resources. Assume that Japan, using similar worker and capital resources, can produce 1,200 bushels of wheat (and zero computers) or 240 computers (and zero wheat). Either country can produce a mix of these products within these limits, and there is no rising opportunity cost to either country (that is, the PPF is a straight line). Currently, each country is devoting half of its resources to producing wheat and the other half to producing computers. They do not trade currently. The two countries are about to meet and discuss trade, and you have been brought in as a trade facilitator. Working with the representatives of each country, can you propose a production and trade schedule that would benefit the parties such that they each end up able to consume more of BOTH products than when they did not trade? If so, explain your proposal. Then, list two possible objections to the production and trade you proposed.You should use PPF graphs to frame up the current and proposed scenarios. As usual, I am looking for 2 pages with text typed.If you cannot propose a production and trade schedule that would benefit both parties, then explain the basis for the failure.
