Table 3-39
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.

-Refer to Table 3-39. Korea should specialize in the production of
A)cars and import airplanes.
B)airplanes and import cars.
C)both goods and import neither good.
D)neither good and import both goods.

Question

Table 3-39
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
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-Refer to Table 3-39. Korea should specialize in the production of
A)cars and import airplanes. 
B)airplanes and import cars. 
C)both goods and import neither good. 
D)neither good and import both goods.

Quizplus · Accepted Answer

According to the table, Korea has a comparative advantage in producing airplanes as it has a lower opportunity cost for producing airplanes. Therefore, it should specialize in producing airplanes and import cars.

Table 3-39 Assume That Japan and Korea Can Switch Between Producing Cars