Suppose the United States and Japan Are the Only Two

question 8

Multiple Choice

Suppose the United States and Japan are the only two countries and each can produce two goods--wheat and cars.If the United States has an absolute advantage in wheat and Japan has an absolute advantage in cars,we know that

• A)there will be no trade because neither country has a comparative advantage in either good.
• B)one of the countries will have a comparative advantage in wheat,but we can't tell which one without more information.
• C)the United States must have a comparative advantage in cars and Japan in wheat.
• D)the United States has a comparative advantage in wheat and Japan has a comparative advantage in cars.

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Definitions:

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