Asked by Briana Quist on Jul 21, 2024
Verified
In one hour,the United States can produce 25 tons of steel or 250 automobiles.In one hour,Japan can produce 30 tons of steel or 275 automobiles.This information implies that:
A) Japan has a comparative advantage in the production of automobiles.
B) the United States has an absolute advantage in the production of steel.
C) Japan has a comparative advantage in the production of both goods.
D) the United States has a comparative advantage in the production of automobiles.
Comparative Advantage
The ability of a party to produce a particular good or service at a lower marginal cost than others.
Steel
An alloy of iron and carbon, and sometimes other elements, used as a primary material in buildings, infrastructure, tools, ships, automobiles, machines, appliances, and weapons.
Automobiles
Motor vehicles designed and manufactured to transport individuals or small groups of people.
- Discern the importance of opportunity costs in the determination of comparative advantages.
- Analyze the benefits of focusing on specialized tasks and trading in a two-entity setup.
Verified Answer
MR
Megan RoubianJul 27, 2024
Final Answer :
A
Explanation :
Japan has a comparative advantage in the production of automobiles because it gives up less steel production to produce automobiles compared to the United States. Comparative advantage is determined by the opportunity cost of producing one good over another.
Learning Objectives
- Discern the importance of opportunity costs in the determination of comparative advantages.
- Analyze the benefits of focusing on specialized tasks and trading in a two-entity setup.