Question

Assume that at maximum hourly productions levels, the United States can produce either 8 yards of fabric or 4 bushels of wheat, whereas Japan can produce either 5 yards of fabric or 6 bushels of wheat. Based on this information,

	A.	both nations will gain from specialization and trade, with the US exporting wheat to Japan, and Japan exporting fabric to the US.
	B.	the United States will benefit from trading but Japan will not.
	C.	both nations will gain from specialization and trade, with the US exporting fabric to Japan, and Japan exporting wheat to the US.
	D.	beneficial trade is impossible between the two countries.

Answer 1

sol:

Instead of producing all consumer products on their self, specialisation refers to the propensity of countries to specialise in some products which they exchange for other goods. Countries create a extra of the commodity they specialise in and exchange it for another country's surplus products.

Given that the U.S. can produce either 8 yards of fabric or 4 bushels of wheat at optimum hourly output levels, Japan can produce either 5 yards of fabric or 6 bushels of wheat. Based on the details here.

A. Specialization and exchange would favour both countries, with the US exporting fabrics to Japan, and Japan exporting wheat to the US.

B.the United States will benefit from trading but Japan will not. because the US has comparative advantage for the roduction of  the 8 yards of fabric as compare to Japan that can produce only fabric of 5 yards.The advantages of specialisation include improved economic productivity , customer advantages and growth opportunities for competitive industries.

C. Yes, with the US exporting fabric to Japan, and Japan exporting wheat to the US, both nations would benefit from specialisation and trade, because both nations are better places to manufacture favourable goods.

D. so, by comapring the both the comparative benefit and cost , it can be said that trade is benificial between and possible between the two countries.