Question

Which of the following options is correct?

Assume, for Japan, that the domestic price of automobiles without international trade is lower than the world price of automobiles. This suggests that, in the production of automobiles,

a. Japan has a comparative advantage over other countries and Japan will import automobiles.
b. Japan has a comparative advantage over other countries and Japan will export automobiles.
c. other countries have a comparative advantage over Japan and Japan will import automobiles.
d. other countries have a comparative advantage over Japan and Japan will export automobiles.

Answer 1

The correct answer is b. Japan has a comparative advantage over other countries and Japan will export automobiles.

Step-by-step explanation:

Considering the market price as a strategy of massification and insertion in other markets, it is considered that this situation corresponds to a comparative advantage considering that in the market the price of vehicles is usually higher than that produced by the Asian country. Japan can perfectly offer its product in other markets where there are great possibilities for growth and there are no commercial barriers. Generally, in less developed countries, this type of automobile is more likely to be sold, since developed or industrialized countries establish trade barriers in order to protect their own industry.