Questions: Question 16 1 pts 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 not trade airplanes or televisions with Japan. import airplanes from Japan and export televisions to Japan. export airplanes to Japan and import televisions from Japan. export both airplanes and televisions to Japan. Previous Next

The answer is: export airplanes to Japan and import televisions from Japan.

Explanation:

1. Comparative Advantage: This concept refers to the ability of a country to produce a particular good at a lower opportunity cost than another country. In this scenario, the U.S. has a comparative advantage in producing airplanes, while Japan has a comparative advantage in producing televisions. This means that the U.S. can produce airplanes more efficiently relative to televisions compared to Japan, and vice versa for Japan.

2. Absolute Advantage: This refers to the ability of a country to produce more of a good with the same amount of resources than another country. The U.S. has an absolute advantage in producing both airplanes and televisions, meaning it can produce more of both goods than Japan with the same resources.

3. Trade Strategy: Even though the U.S. has an absolute advantage in both goods, it benefits from specializing in the production of the good in which it has a comparative advantage (airplanes) and trading for the good in which it has a comparative disadvantage (televisions). This allows both countries to enjoy a greater variety and quantity of goods than they would in isolation.

• Option 1: "not trade airplanes or televisions with Japan" is incorrect because both countries can benefit from trade based on their comparative advantages.
• Option 2: "import airplanes from Japan and export televisions to Japan" is incorrect because it contradicts the comparative advantage each country holds.
• Option 3: "export airplanes to Japan and import televisions from Japan" is correct as it aligns with the comparative advantages of both countries.
• Option 4: "export both airplanes and televisions to Japan" is incorrect because it does not take advantage of Japan's comparative advantage in televisions.