Which of the following statements is true for the two countries illustrated in Figure 35.1?

Question

Quizplus · Accepted Answer

Figure 35.1 shows the production possibility frontiers for Japan and the United States. The slope of these frontiers represents the opportunity cost of producing one good in terms of the other. The United States has a steeper slope for motorcycles (meaning it gives up more DVD players for each additional motorcycle produced) while Japan has a steeper slope for DVD players. Therefore, the United States has a comparative advantage in DVD players, while Japan has a comparative advantage in motorcycles. Option A and C are incorrect since Japan has only a comparative advantage in motorcycles, not an absolute advantage. Option D is incorrect since it states the opposite of what is true.

Which of the Following Statements Is True for the Two