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Q1

a)

According to the graph, the opportunity cost incurred by the economy to increase its production of rice from 50 tons to 85 tons would be 25000-10000=15000 cars.

b)

According to the graph, only points on the production probability curve utilises its existing resources efficiently. They would be point B,C and D.

c)

Point a is above the production potential current, so using its current resources cannot achieve combination A unless more resources are borrowed.

d)

i)

Rainstorm will do harm to rice fields and increase the production cost of rice, which can also be understood as the reduction of resources for rice production. At the same time, the rainstorm may inundate the automobile factory, which will increase the production cost of automobiles, which can also be understood as the reduction of resources used to produce automobiles. Therefore, the PPC curve will move to the left and down as a whole.

ii)

If Japan relocates its car factories to higher ground, future floods will mainly affect rice fields, increasing the production cost of rice. It can also be understood as reducing the resources used to produce rice, but almost without affecting the production of cars. Therefore, the PPC curve moves to the left on the rice side, while the car side remains basically unchanged.

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