-Refer to Table 3-5. How could Canada and Japan both benefit?
A) by Canada specializing in airplanes and Japan specializing in airplanes
B) by Canada specializing in cars and Japan specializing in airplanes
C) by Canada specializing in airplanes and Japan specializing in cars
D) by Canada specializing in neither good and Japan specializing in both goods

Question

-Refer to Table 3-5. How could Canada and Japan both benefit?
A) by Canada specializing in airplanes and Japan specializing in airplanes 
B) by Canada specializing in cars and Japan specializing in airplanes 
C) by Canada specializing in airplanes and Japan specializing in cars 
D) by Canada specializing in neither good and Japan specializing in both goods

Quizplus · Accepted Answer

Canada and Japan can both benefit from trade by specializing in the production of goods for which they have a comparative advantage. If Canada specializes in airplanes and Japan specializes in cars, both countries can trade these goods, allowing each to consume more of both goods than they would be able to produce on their own. This is based on the principle of comparative advantage, where countries benefit from specializing in goods they can produce more efficiently relative to other goods and then trading with others.