Suppose the USA can produce 1 car every 10 hours and 1 mobile phone every 4 hours. Also assume that Japan can produce 1 car every 5 hours and 1 mobile phone every hour. If the USA and Japan decide to trade, which of the following statements must be true?
A) The USA should specialize in the production of cars.
B) The USA is more productive than Japan in both goods.
C) Only the USA will benefit from trade in this case.
D) The USA has a comparative advantage over Japan in the production of mobile phones.
Correct Answer:
Verified
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