Question

Germany uses 30 units of resources to produce a laptop and 160 units of resources to produce a car. Japan uses 40 units of resources to produce a laptop and 150 units of resources to produce a car. based on the information, what will be the pattern of trade?

Japan will export laptops to Germany

Japan will import cars from Germany

Japan will export cars to Germany

Germany will export cars to Japan

Answer 1

We have the following information regarding the use of resources.

	Germany	Japan
Laptop	30 units of resources	40 units of resources
Car	160 units of resources	150 units of resources

Clearly, Japan has an absolute advantage in the production of cars because it uses lesser resources than Germany to produce. On the other hand, Germany has an absolute advantage in the production of laptops as it uses lesser resources to produce it than Japan.

Hence, Japan will specialise in Cars and export it to Germany. On the other hand, Germany will specialise in Laptops and export it to Japan.

Thus, Japan will export cars and import laptops and Germany will export laptops and import Cars.

Thus, the correct option is (c). Japan will export cars to Germany.