Suppose the United States and Japan each produce only two goods and have the production possibilities shown in Figure 17.1.Without trade,Japan produces at point A and the United States produces at point B.Use the figure to answer the question(s)below.
-In Figure 17.1 what is the opportunity cost of a motorcycle in Japan?

Question

Suppose the United States and Japan each produce only two goods and have the production possibilities shown in Figure 17.1.Without trade,Japan produces at point A and the United States produces at point B.Use the figure to answer the question(s)below. 
-In Figure 17.1 what is the opportunity cost of a motorcycle in Japan?

Quizplus · Accepted Answer

To find the opportunity cost of a motorcycle in Japan, we need to look at the slope of the production possibilities curve (PPC) for Japan. The slope of the PPC represents the opportunity cost of the good on the y-axis (motorcycles) in terms of the good on the x-axis (DVD players). We can see that the slope of the PPC for Japan is 2, which means that Japan must give up 2 DVD players for every motorcycle it produces. Therefore, the opportunity cost of a motorcycle in Japan is 2 DVD players per motorcycle.

The best choice for Japan or the United States depends on their respective opportunity costs. The country with the lower opportunity cost of producing a good should specialize in producing that good and trade with the other country. In this case, we do not have information about the opportunity cost of producing goods in the United States, so we cannot determine the best choice(s) for these countries.

Suppose the United States and Japan Each Produce Only Two