Suppose the USA Can Produce 1 Car Every 10 Hours

question 84

Multiple Choice

Suppose the USA can produce 1 car every 10 hours and 1 mobile phone every 4 hours. Also assume that Japan can produce 1 car every 5 hours and 1 mobile phone every hour. If the USA and Japan decide to trade, which of the following statements must be true?

• A) The USA should specialize in the production of cars.
• B) The USA is more productive than Japan in both goods.
• C) Only the USA will benefit from trade in this case.
• D) The USA has a comparative advantage over Japan in the production of mobile phones.