Table 3-5

-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?
A)Canada will export cars and Japan will export airplanes.
B)Canada will export airplanes and Japan will export cars.
C)Canada will export cars and Japan will export cars.
D)Canada will export airplanes and Japan will export airplanes.

Question

Table 3-5
 
-Refer to Table 3-5. If Canada and Japan trade based on the principle of comparative advantage, which of the following is correct?
A)Canada will export cars and Japan will export airplanes. 
B)Canada will export airplanes and Japan will export cars. 
C)Canada will export cars and Japan will export cars. 
D)Canada will export airplanes and Japan will export airplanes.

Quizplus · Accepted Answer

According to the table, Canada has a comparative advantage in producing cars (2 cars per worker versus 1 airplane per worker), while Japan has a comparative advantage in producing airplanes (3 airplanes per worker versus 1 car per worker). Therefore, it is most efficient for Canada to specialize in producing cars and for Japan to specialize in producing airplanes, leading to Canada exporting cars and Japan exporting airplanes. Answer A is the only choice that matches this reasoning.

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