Figure 18-5

-From the graph in Figure 18-5 (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 18-5
 
-From the graph in Figure 18-5 (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. Therefore, Japan has an absolute advantage in both. However, the slope of the curve for computers is steeper for Japan, indicating a higher opportunity cost of producing computers compared to TVs. This implies that Japan has a comparative advantage in producing TVs over computers. Therefore, option C is the correct choice. Option A is incorrect because Japan has a comparative advantage in producing TVs as well. Option B is incorrect because Japan has an absolute advantage in both goods. Option D is incorrect because the graph does not provide enough information to determine China's comparative advantage.

Figure 18-5 -From the Graph in Figure 18-5 (Curves Show Output Per