Table 3-5

-Refer to Table 3-5.If the United States and Japan trade based on the principle of comparative advantage,the United States will
A)export cars (but not airplanes) to Japan.
B)export airplanes (but not cars) to Japan.
C)export cars and airplanes to Japan.
D)import cars and airplanes from Japan.

Question

Table 3-5
 
-Refer to Table 3-5.If the United States and Japan trade based on the principle of comparative advantage,the United States will
A)export cars (but not airplanes) to Japan. 
B)export airplanes (but not cars) to Japan. 
C)export cars and airplanes to Japan. 
D)import cars and airplanes from Japan.

Quizplus · Accepted Answer

According to Table 3-5, the United States has a comparative advantage in producing airplanes with a lower opportunity cost than producing cars. Japan, on the other hand, has a comparative advantage in producing cars with a lower opportunity cost than producing airplanes. Therefore, if the two countries trade based on comparative advantage, the United States should export airplanes to Japan and import cars from Japan. Option B is the only option that suggests the United States exports airplanes to Japan, which is the correct choice.

Table 3-5 -Refer to Table 3-5.If the United States and Japan Trade