If Japan Has a Comparative Advantage Over the United States

question 123

Multiple Choice

If Japan has a comparative advantage over the United States in the production of new cars and can sell a new car for an average price of $22,000, while the United States can sell a new car for an average price of $25,000, if the two countries engage in trade, the terms of trade will be

• A) less than $22,000.
• B) somewhere between $22,000 and $25,000.
• C) $23,500 exactly.
• D) more than $25,000.

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Definitions:

Source Effects

The influence that the perceivable characteristics of a message source have on the recipient's acceptance or rejection of the message.

Efficacy

The ability to produce a desired or intended result, often used in the context of the effectiveness of drugs, treatments, or methodologies.

Cognitive Dissonance

A mental struggle caused by holding conflicting beliefs and attitudes at the same time.

Leon Festinger

A social psychologist known for developing the theory of cognitive dissonance.