If productivity growth in Japan exceeds productivity growth in the U.S. ,to the point that the resource cost in ALL Japanese industries is lower than in the U.S. ,then

Question

Quizplus · Accepted Answer

If productivity growth in Japan exceeds productivity growth in the U.S. to the point that resource cost in ALL Japanese industries is lower than in the U.S., then Japan can produce goods at a lower cost and become more competitive. However, this does not mean that trade between the U.S. and Japan is not possible. In fact, it is still possible to have mutually beneficial trade, where Japan can export its goods to the U.S. and the U.S. can export goods that Japan cannot produce as efficiently. Therefore, option B is the correct answer.

If Productivity Growth in Japan Exceeds Productivity Growth in the U.S