Suppose the U

question 1

Multiple Choice

Suppose the U.S.and Japan both produce airplanes and televisions and the U.S.has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions.If the U.S.exports airplanes to Japan and imports televisions from Japan,

• A)both countries,as a whole,will be better off.
• B)all individuals in both countries will be better off.
• C)both countries,as a whole,will be worse off.
• D)all individuals in both countries will be worse off.

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Definitions:

Efficient Outcome

A situation in which resources are allocated in the most effective way possible, often achieved through market equilibrium where supply equals demand.

Government Intervention

Actions by a government to influence or directly manage an economy or specific sectors, aiming to correct market failures, stimulate economic growth, or achieve social objectives.

Externality Problems

Situations in economics where the actions of individuals or businesses have effects, either positive or negative, on unrelated third parties that are not reflected in the cost or benefit of the actions.

Social Welfare

A holistic measure of the well-being and quality of life of individuals and groups within a society.