Suppose the U.S.and Japan both produce airplanes and televisions and the U.S.has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions.If the U.S.exports airplanes to Japan and imports televisions from Japan,
A)both countries,as a whole,will be better off.
B)all individuals in both countries will be better off.
C)both countries,as a whole,will be worse off.
D)all individuals in both countries will be worse off.

Question

Quizplus · Accepted Answer

By specializing in producing the goods they have a comparative advantage in, both countries can increase their overall production and trade with each other to obtain the goods they don't produce as efficiently. This leads to an increase in overall welfare for both countries. However, it is important to note that there may be winners and losers within each country depending on their specific industries and job skills.