Table 3-26 Assume That Japan and Korea Can Switch Between Producing Cars

question 516

Multiple Choice

Table 3-26
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
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-Refer to Table 3-26. 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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