Question

Below is the production possibilities frontier for Japan. It shows that Japan is able to produce either 80 bottles of milk or 50 cartons of eggs using all of its available resources. Also suppose that Japan decides to produce at point A : 60 bottles of milk and 12 cartons of eggs. If Japan engages in international trade and trades 30 bottles of milk for 30 cartons of eggs with another country, it will be able to consume outside of its production possibilities frontier. How many bottles of milk will the country have at the end of the exchange

Answer 1

Answer and Explanation:

The computation of the number of bottle of milk will the country at the end of the exchange is shown below:

The Number of milk bottles Japan is presently producing is 60 bottles

The Number of milk bottles Japan trades with another country is 30 bottles

So,

The Number of Milk bottles left with Japan after doing an exchange is

= 60 - 30

= 30 bottles

Also,

The Number of egg cartons Japan is presently producing is 12

The Number of egg cartons Japan trades with another country is 30

So,

Number of eggs cartons left with Japan after considering an exchange is

= 12 + 30

= 42 cartons