Suppose, USA and Japan both countries produce Truck and Sports Car. Assume that Japan's maximum production is 20 trucks per day if they produce only trucks, and 80 sports cars per day if they produce only sports cars.

On the other hand, USA's maximum daily production is 40 trucks per day when they only produce trucks and 40 sports cars when they produce only sports cars.

Question 1 (4 points): Who has the 'Absolute Advantage' producing the trucks and sports cars? Explain why?

Question 2 (4 points): Draw the Production possibility curve for Japan and USA? Use sports car on the horizontal axis and truck on the vertical axis.

Question 3 (6 points): Who has the 'Comparative Advantage' producing the sports cars and who has the comparative advantage over trucks? You need to show me your mathematical calculation and then you will justify your answer as that why one country (Japan or USA) has a comparative advantage over the other country.

Question 4 (6 points): Assume that without trade Japan produces and consumes 10 trucks and 40 sports cars. On the other hand, without trade, the USA produces and consumes 20 trucks and 20 sports cars. What will happen if both countries decided to trade with each other? How much each country can gain from the trade? Remember the table, I made in the class to find the gains from the trade? You need to make a similar table that will show how many quantities of trucks and sports cars each country can gain from trading with each other.

Please answer all 4 questions clearly and correctly.