Suppose That for Each Automobile Japan Produces It Must Forego

question 100

Multiple Choice

Suppose that for each automobile Japan produces it must forego producing 40 computers.The United States must forego producing 80 computers for each automobile it produces.Which of the following is true?

• A)Japan has a comparative advantage in producing computers.
• B)the U.S.has a comparative advantage in producing computers.
• C)the U.S.has a comparative advantage in producing automobiles.
• D)the U.S.has an absolute advantage in producing automobiles.
• E)the opportunity cost of producing computers is the same for Japan and the U.S.

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Definitions:

Market Price

The ongoing price point for transactions involving assets or services in the open market.

Costs Of Production

Expenses incurred during the process of creating a product or service, including raw materials, labor, and overhead costs.

Firm

A business organization, such as a corporation or partnership, which sells goods or services in exchange for money.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive, usually a measure of profit.