Answer:
A) Japan specializes in Auto while US specializes in Planes
B) The range of terms of trade:
P = A . if P =A = 2A then the specialization will be beneficial to both countries.
C) The best terms of trade will be
P = ( A + 2A )/ 2 = 3A / 2 = 1.5A
D) The net benefit for each country (after specialization)
Japan : 20A-(7.5A+10A) = 2.5A
U.S : 40P- (13.33P + 20P) = 6.67P
E) some of The limitations of production and export :
i) There are more than two countries in the world hence the assumption are not real
ii) In the table the quality of goods produced is not tabulated/considered as well
iii) The technological expertise of both countries where not considered as well
Explanation:
A) From the information provided below ; Japan specializes in Auto while US specializes in Planes , this is because Japan is more efficient in the production of Autos when compared with Plane production.
B) The range of terms of trade:
lets assume that trade in Japan before specialization was : 12 A = 6 P, hence P = 2A also assume that of US to be ; P = A . if P =A = 2A then the specialization will be beneficial to both countries.
C) The best terms of trade will be
P = ( A + 2A )/ 2 = 3A / 2 = 1.5A
D) The net benefit for each country (after specialization)
Japan : 20A-(7.5A+10A) = 2.5A
U.S : 40P- (13.33P + 20P) = 6.67P
E) some of The limitations of production and export :
i) There are more than two countries in the world hence the assumption are not real
ii) In the table the quality of goods produced is not tabulated/considered as well
iii) The technological expertise of both countries where not considered as well
