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If both countries specialize completely by producing only that for which they have a comparative advantage and then trade 2,000 automobiles for 12,000 computers, what will each country's consumption of automobiles and computers be?

To answer this question, fill in the table below with the amounts of automobiles and computers the United States and Japan will consume with specialization and trade. (Enter your responses as whole numbers.)

\begin{tabular}{lcc}
\hline
& Automobiles & Computers \\
\hline
United States & [tex]$\square$[/tex] & [tex]$\square$[/tex] \\
Japan & [tex]$\square$[/tex] & [tex]$\square$[/tex] \\
\hline
\end{tabular}



Answer :

GinnyAnswer
Sure, let's break it down into a detailed, step-by-step solution.

1. Initial assumption of specialization:
- United States specializes in producing computers.
- Japan specializes in producing automobiles.

2. Initial production (before trade):
- United States: 0 automobiles, 12,000 computers.
- Japan: 2,000 automobiles, 0 computers.

3. After trade (2,000 automobiles for 12,000 computers):
- United States will receive 2,000 automobiles from Japan.
- United States will trade 12,000 computers to Japan.
- Japan will receive 12,000 computers from the United States.
- Japan will trade 2,000 automobiles to the United States.

4. Final consumption (after trade):
- United States: 2,000 automobiles, 0 computers (because they traded all 12,000 computers they produced for 2,000 automobiles).
- Japan: 0 automobiles, 12,000 computers (because they traded all 2,000 automobiles they produced for 12,000 computers).

Here is the resulting table:

[tex]\[ \begin{tabular}{lrl} \hline & Automobiles & Computers \\ \hline United States & 2,000 & 0 \\ Japan & 0 & 12,000 \\ \hline \end{tabular} \][/tex]

So, the United States will consume 2,000 automobiles and 0 computers, while Japan will consume 0 automobiles and 12,000 computers.

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