20 Jul WHAT WOULD HAPPEN TO JAPANESE PRODUCTION IF THE RELATIVE PRICE STAYED CONSTANT?
Suppose that Japan is a capital abundant country and can produce either capital intensive cars or la Show more Suppose that Japan is a capital abundant country and can produce either capital intensive cars or labor intensive oats. Draw the PPF ( Pick and indicate an ecient point of production (IGNORE POINTS OF COMPLETE SPECIALIZATION) graphically illustrate the pre-trade relative price of cars in terms of oats at thisproduction point. Suppose Japan experiences a technology innovation that makes the productionof cars more ecient. In the same diagram demonstrate the change JapansPPF. e Briey explain and show graphically what happened to the relative price ifJapan keeps the production of cars constant? What would happen to Japanese production if the relative price stayed constant? Show less
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