Table 3-7 Assume That Japan and Korea Can Switch Between Producing Cars

question 287

Multiple Choice

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.

-Refer to Table 3-7.Assume that Japan and Korea each has 2400 hours available.If each country spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 cars for 6 airplanes,then

• A) Japan and Korea will both gain from this trade.
• B) Japan will gain from this trade, but Korea will not.
• C) Korea will gain from this trade, but Japan will not.
• D) neither Japan nor Korea will gain from this trade.

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Definitions:

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