Table 3-5

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what product will Japan export to Canada?
A)Cars
B)both airplanes and cars
C)Airplanes
D)Japan should buy both products from Canada.

Question

Table 3-5
 
-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, what product will Japan export to Canada?
A)Cars 
B)both airplanes and cars 
C)Airplanes 
D)Japan should buy both products from Canada.

Quizplus · Accepted Answer

According to the principle of comparative advantage, Japan will export the good that it has a relatively lower opportunity cost of producing. In this case, Japan has a lower opportunity cost of producing airplanes compared to Canada. Therefore, Japan will specialize in producing airplanes and export them to Canada.

Table 3-5 -Refer to Table 3-5. If Canada and Japan Trade Based