Suppose there are two countries: Canada and Japan, each producing 2 goods: computers and wheat. The only input they have is labor. Suppose both countries have 10 million workers. A Canadian worker can produce 10 tonnes of wheat per year or 4 computers. A Japanese worker can produce either 5 tonnes of wheat or 4 computers.

a. Construct a table of output per worker from the information in the question. Which country has absolute advantage in Wheat? Computers? Explain why?

b. Use the above information to draw the PPF of each country separately. If each country chooses to remain self-sufficient and devotes half its labor towards each good, how much of each good will be produced. Show this point on the PPF graph.

c. Construct a table to show the opportunity cost of each country for each of the goods they produce. Which country has comparative advantage in Wheat? Computers? Explain Why?