Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.

-Refer to Table 3-7.Without trade,Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes.As a result,Japan gained
A) 0 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
B) 2 cars and 2 airplanes and Korea gained 1 car and 1 airplane.
C) 28 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.
D) 52 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.

Question

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
 
-Refer to Table 3-7.Without trade,Japan produced and consumed 50 cars and 6 airplanes and Korea produced and consumed 27 cars and 7 airplanes.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 28 cars for 8 airplanes.As a result,Japan gained
A) 0 cars and 2 airplanes and Korea gained 1 car and 1 airplane. 
B) 2 cars and 2 airplanes and Korea gained 1 car and 1 airplane. 
C) 28 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes. 
D) 52 cars and 8 airplanes and Korea gained 28 cars and 8 airplanes.

Quizplus · Accepted Answer

Before trade, Japan had a comparative advantage in producing cars and Korea had a comparative advantage in producing airplanes. So, after specialization and trade, Japan would produce more cars and Korea would produce more airplanes. 
Japan would give up 28 cars to get 8 airplanes, which means Japan would be left with 22 cars (50-28) and gain 2 airplanes (6+2). 
Korea would give up 8 airplanes to get 28 cars, which means Korea would be left with 1 airplane (7-8) and gain 1 car (27+1).
Therefore, Japan gained 2 airplanes and Korea gained 1 car and 1 airplane. Option B is the correct answer.

Table 3-7 Assume That Japan and Korea Can Switch Between Producing Cars