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Problem: Suppose the US and Japan have the following production possibility tables (final output combinations):
Japan
United States
Bolts of Cloth
Tons of Wheat
1000
0
500
800
100
400
200
600
300
a. Draw each country's production possibility curve.
b. In what good does the United States have a comparative advantage? What about Japan?
c. Is there a possible trade that benefits both countries? If there are several such possible situations, please discuss ONLY one.
d. Please demonstrate your answer to point c above graphically (be sure to properly label your graph).
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