Assume that Japan has a labor endowment of LJ= 500, and America has a labor endowment of LA= 600. The original input coefficients are given in the following table.

Original Input Coefficients for Production of Steel and Wheat in Japan and America.

Japan America

Units of labor per ton of steel. jLS= 5 aLS= 10

Units of labor per ton of wheat jLW= 15 aLW= 5

1. Assume that Japan experiences technical progress that doubles the productivity of labor in both industries.
2. Using appropriate graph, illustrate changes inJapan's production possibilitiesfrontier due to the technical improvement.
3. What is the effect on the pattern of comparative advantage and trade? What is theeffect on Japan's welfare? On U.S. welfare?
4. Assume both countries experience technical progress that doubles the productivity of labor in both industries.
5. What is the effect on the pattern of comparative advantage and trade? What is the effecton Japan's welfare? On U.S. welfare?