Explain how the labour force to bread production

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There are two countries in the world: Canada and Japan. There are two goods - steel and bread. Canada has 100 workers at its disposal and if it allocates all its labour to steel production it can produce 25 tons of steel; alternatively, if it allocates all its labour to bread production, it can produce 100 tons of bread. Japan also has 100 workers and if it allocates all of its workers to steel production it can produce 20 tons of steel and if it allocates all of its labour force to bread production then it can produce 50 tons of bread.

Show with the help of a diagram that both countries will gain from trade assuming increasing opportunity cost PPF. Verbally explain your graph(s). Will you have a complete specialization in the production of the comparative advantage product if PPF is characterized by increasing opportunity cost? Explain.

Reference no: EM13236566

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