Table 3-5

-Refer to Table 3-5.If the United States and Japan specialize and trade based on the principle of comparative advantage,the United States will
A)export cars and Japan will export airplanes.
B)export airplanes and Japan will export cars.
C)export cars and Japan will export cars.
D)export airplanes and Japan will export airplanes.

Question

Table 3-5
 
-Refer to Table 3-5.If the United States and Japan specialize and trade based on the principle of comparative advantage,the United States will
A)export cars and Japan will export airplanes. 
B)export airplanes and Japan will export cars. 
C)export cars and Japan will export cars. 
D)export airplanes and Japan will export airplanes.

Quizplus · Accepted Answer

The principle of comparative advantage suggests that each country should specialize in producing the good for which it has a lower opportunity cost. If the U.S. has a comparative advantage in producing airplanes and Japan in producing cars, then the U.S. will export airplanes and Japan will export cars.

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