Suppose the u.S. And japan can both produce airplanes and televisions and the u.S. Has a comparative advantage in the production

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4 years ago

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Suppose the u.S. And japan can 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. Also suppose the u.S. Has an absolute advantage in the production of both airplanes and televisions. The u.S. Should

Social Studies

1 answer:

ArbitrLikvidat [17] · Answer 1 · 2021-12-04T17:06:07+03:00

Answer: sell airplanes to Japan and buy televisions from Japan

Explanation: When a country has comparative advantage, it means that it is able to supply goods and services at a lower cost than another country with which it trades.

Absolute advantage here means that the U.S. can produce more quantity at a less price. Considering the inputs such as technology and materials required, the U.S. has the absolute advantage.

Because the US has comparative advantage over Japan in the production of airplanes, it should focus on manufacturing this and instead of manufacturing televisions, it should import them from Japan which has a comparative advantage.