Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice) will

Question

Quizplus · Accepted Answer

To determine which country has a comparative advantage in guns, we need to compare their opportunity costs. The opportunity cost of producing one more unit of guns in Japan is 2 units of rice (since they give up the production of 2 units of rice to produce 1 gun) while the opportunity cost of producing one more unit of guns in China is 3.33 units of rice (since they give up the production of 3.33 units of rice to produce 1 gun). Therefore, Japan has a lower opportunity cost of producing guns and a comparative advantage in guns. This means that Japan should specialize in producing guns and trade with China who has a comparative advantage in producing rice.

Japan and China Produce Guns and Rice