If Japan Does Not Have a Comparative Advantage in Producing

question 158

Multiple Choice

If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy of reducing or eliminating imports of rice into their country would include:

• A)​Japan will be able to consume a combination of rice and other goods' consumption beyond their domestic production possibilities curve.
• B)​the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall.
• C)​the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall.
• D)​the price of rice in Japan will fall.

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Definitions:

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction, without them necessarily being involved in the transaction.

Marginal Social Benefit

Sum of the marginal private benefit plus the marginal external benefit.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Abatement

The reduction or removal of environmental pollutants or negative externalities to improve environmental quality.