Suppose China can produce either 300 telephones or 200 DVD players,and Japan can produce either 200 telephones or 100 DVD players.Implicitly,Japan has

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Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another country. In this case, China has an opportunity cost of 1.5 (300/200) DVD players for every telephone produced, while Japan has an opportunity cost of 0.5 (100/200) DVD players for every telephone produced. Therefore, Japan has a comparative advantage in producing telephones. However, it does not necessarily have an absolute advantage since it can only produce 200 telephones while China can produce 300.

Suppose China Can Produce Either 300 Telephones or 200 DVD