1. Specialization and production possibilities Suppose Japan produces only table
ID: 1158165 • Letter: 1
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1. Specialization and production possibilities Suppose Japan produces only tablets and smartphones. The resources that are used in the production of these two goods are not specialized-that is the same set of resources is equally useful in producing both smartphones and tablets. The shape of Japan's production possibilities frontier (PPF) should reflect the fact that as Japan produces more smartphones and fewer tablets, the opportunity cost of producing each additional smartphone The following graphs show two possible PPFs for Japan's economy: a straight-line PPF (PPF) and a bowed-out PPF (PPF2). Graph 1 Graph 2 PPF. PPF Om Om SMARTPHONES SMARTPHONES Based on the previous description, the trade-off Japan faces between producing smartphones and tablets is best represented by Grade It Now Save & ContinueExplanation / Answer
It has been mentioned that the resources are not specialized and that the ‘same set of resources is equally useful’ in producing both smartphones and tablets.
This means that with the given resources, in 1 hour, Japan produces as many smartphones as tablets.
Opportunity cost refers to the cost of sacrificing the next best alternative. Since in this case the same number of tablets and smartphones are produced, the opportunity cost of sacrificing e tablet or a smartphone is constant.
Thus the first answer is: the opportunity cost of producing each additional smartphone is Constant
The shape of a PPF denotes the change in opportunity cost of production. When opportunity cost is increasing, the shape of the PPF is bowed out or concave. When opportunity cost is decreasing, the PPF is convex. But since opportunity cost here is constant, the PPF will be a downward sloping straight line.
Therefore, the second answer is:
The trade-off Japan faces between producing smartphones and tablets is best represented by Graph 1
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