e. Which country has a comparative advantage in producing cars? f. Which country has a comparative advantage in producing grain?

Explanation:

The country that has a competitive advantage in producing something is the one that has less opportunity cost when they do so. In other words, they give up less of another good in order to produce a good.

The Japanese can either produce 4 cars or 5 tons of grain in a year. If they forgo 1 car therefore they produce 5/4 = 1.25 tons of grain per year.

If Americans forgo 1 car they produce 10/4 = 2.5 tons of grain.

Japan has a lower opportunity cost producing cars so they have a comparative advantage.

For Japan to produce 1 ton of grain they will forgo 5/4 = 0.8 cars. For Americans to produce 1 ton of grain they will forgo 4/10 = 0.4 cars.

America has a lower opportunity cost producing grain so they have a comparative advantage.

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