Which of the following best describes the comparative advantage of the two countries illustrated in Figure 35.1?
A. Japan has a comparative advantage in motorcycles, the United States in DVD players.
B. Japan has a comparative advantage in DVD players, the United States in motorcycles.
C. The United States has a comparative advantage in both goods.
D. Japan has a comparative advantage in both goods.
Answer: A
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If the marginal utility per dollar spent on Good X exceeds that of Good Y, the utility-maximizing consumer should:
a. buy less of Good X and more of Good Y. b. buy less of Good Y and more of Good X. c. buy more of both Good X and Good Y. d. buy less of both Good X and Good Y.
The principle of comparative advantage is associated with
a. restricting consumer choices. b. greater production at higher prices. c. specialization and exchange. d. comparing the efficiency of alternative tariffs.
When demand decreases, the demand curve shifts
A. on its axis, becoming flatter. B. upward and to the right. C. downward and to the left. D. on its axis, becoming more vertical.
The most desired goods and services that are given up in order to obtain something else is the:
A. Comparative advantage. B. Absolute advantage. C. Opportunity cost. D. Advantage cost.