Which of the following best describes the comparative advantage of the two countries illustrated in Figure 35.1?
A) Japan has a comparative advantage in both goods.
B) Japan has a comparative advantage in DVD players, the United States in motorcycles.
C) Japan has a comparative advantage in motorcycles, the United States in DVD players.
D) The United States has a comparative advantage in both goods.

Question

Which of the following best describes the comparative advantage of the two countries illustrated in Figure 35.1?
A) Japan has a comparative advantage in both goods. 
B) Japan has a comparative advantage in DVD players, the United States in motorcycles. 
C) Japan has a comparative advantage in motorcycles, the United States in DVD players. 
D) The United States has a comparative advantage in both goods.

Quizplus · Accepted Answer

The country that can produce a good at a lower opportunity cost has the comparative advantage. Based on the graph, Japan can produce motorcycles at a lower opportunity cost compared to the United States, while the United States can produce DVD players at a lower opportunity cost compared to Japan. Therefore, Japan has a comparative advantage in motorcycles and the United States in DVD players.

Which of the Following Best Describes the Comparative Advantage of the Two