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Could you please provide step by step solution? Thank you very much in advance. Problem 3. (Standard trade model) [week 4] Japan primarily exports manufactured

Could you please provide step by step solution? Thank you very much in advance.

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Problem 3. (Standard trade model) [week 4] Japan primarily exports manufactured goods, while importing raw materials such as food and oil. Use the relative demand-relative supply graph in gure (6- 5) in your textbook to analyze the impact on Japan is terms of trade of the events below. In each case, (i) draw the diagram using the demand and supply curves of manufactures relative to raw materials, (ii) indicate and show in the graph whether the curves shift to the right or to the left (giving intuition behind your answer) and (iii) indicate and show in the graph how the shifts change the equilibrium world relative price and Japan's terms of trade: a) A war in the Middle East disrupts oil supply. b) Korea develops the ability to produce automobiles that it can sell in Canada and the US (big markets for Japanese cars)

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