The Gains from Trade Output Before Specialization and Trade
U. S. Japan Total
Product A 20,000 30,000 50,000
Product B500,000 30,000 530,000
Output After Specialization and Trade
U. S Japan
Total Net Gain
Product 0 60,000 60,000 10,000
Product B 800,000 0 800,000 270,000
What is the benefit of the U. S. producing only Product B and Japan producing only Product A?
A)
B)
Because of comparative advantage, the two countries can produce a
greater amount of products.
Because of absolute advantage, the two countries can produce a greater
amount of products,
The two countries can produce enough of each product individually to
meet their needs.
The total output of Product B increases by 300,000 units.
D)