Suppose the United States can produce 2,000 cars or 2,000 trucks. Japan can produce either 2,000 cars or 1,000 trucks. In terms of car production, we can conclude that

Japan has a Comparative Advantage

Explanation:

The country that has a Comparative Advantage in the production of a good is the one that has to give up less of another good to produce it. In other words, it is the country with a lower Opportunity cost.

The United States can either produce 2,000 cars or 2,000 trucks. This means that to produce 1 car the US foregoes;

= 2,000/2,000

= 1 Truck

Japan can either produce 2,000 cars or 1,000 trucks. This means that for every car produced the Japanese forgo;

= 1,000/2,000

= 0.5 trucks.

The Opportunity cost for the Japanese is less for producing cars so they have the comparative advantage.

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answer; the correct answer is (direct foreign investment);