Question
Consider trade between Japan and Indonesia involving computers and toaster ovens. The number of computers and toaster ovens that a worker can produce in each
Consider trade between Japan and Indonesia involving computers and toaster ovens. The number of computers and toaster ovens that a worker can produce in each country is shown in the table below.
In Japan In Indonesia
One worker can make 12 computers 8 computers
30 toaster ovens 24 toaster ovens
Say that in a world without trade, the Japanese economy has 100,000 workers working on these two products, with 60,000 of them working to produce computers and 40,000 of them working to produce ovens. Indonesia is devoting a total of 240,000 workers to these two products, using half of their workers to produce computers and half of their workers to produce ovens. Now answer the following
questions:
a. Who has the absolute advantage in the production of computers? In the production of ovens?
Explain how you can tell.
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