Question

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests: ____________

a. Japan has a comparative advantage relative to France in producing wine, and Russia has a comparative advantage to Japan in producing cars.
b. Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.
c. Japan has an absolute advantage relative to Russia in producing cars, and France has an absolute advantage relative to Japan in producing wine.
d. Japan has an absolute advantage relative to France in producing wine, and Russia has an absolute advantage relative to Japan in producing cars.

Answer 1

B. Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.