Table 3-5

-Refer to Table 3-5.The United States has a comparative advantage in
A)airplanes and Japan has a comparative advantage in airplanes.
B)cars and Japan has a comparative advantage in airplanes.
C)airplanes and Japan has a comparative advantage in cars.
D)neither good and Japan has a comparative advantage in both goods.

Question

Table 3-5
 
-Refer to Table 3-5.The United States has a comparative advantage in
A)airplanes and Japan has a comparative advantage in airplanes. 
B)cars and Japan has a comparative advantage in airplanes. 
C)airplanes and Japan has a comparative advantage in cars. 
D)neither good and Japan has a comparative advantage in both goods.

Quizplus · Accepted Answer

According to the table, the United States has a lower opportunity cost for producing airplanes (1 car = 3/4 airplane) compared to Japan (1 car = 2/3 airplane). On the other hand, Japan has a lower opportunity cost for producing cars (1 airplane = 3/2 cars) compared to the United States (1 airplane = 1 car). Therefore, the United States has a comparative advantage in airplanes and Japan has a comparative advantage in cars.

Table 3-5 -Refer to Table 3-5.The United States Has a Comparative Advantage