Figure 34-5

-From the graph in Figure 34-5 (curves show output per unit of labor input), one can infer that
A)Japan has an absolute advantage in TVs and computers, but a comparative advantage only in TVs.
B)Japan has only a comparative advantage in TVs.
C)Japan has an absolute advantage in both TVs and computers, but a comparative advantage only in computers.
D)China has a comparative advantage in computers.

Question

Figure 34-5
​ 
-From the graph in Figure 34-5 (curves show output per unit of labor input), one can infer that
A)Japan has an absolute advantage in TVs and computers, but a comparative advantage only in TVs. 
B)Japan has only a comparative advantage in TVs. 
C)Japan has an absolute advantage in both TVs and computers, but a comparative advantage only in computers. 
D)China has a comparative advantage in computers.

Quizplus · Accepted Answer

The graph shows that Japan has a higher output per unit of labor input in both TVs and computers compared to China. Thus, Japan has an absolute advantage in both products. However, when comparing the opportunity cost of producing TVs and computers in Japan, it is lower for computers. Therefore, Japan has a comparative advantage in producing computers. China's position on the graph is not clear and cannot be inferred from the given information.

Figure 34-5 ​

Figure 34-5