Question: Continuing with the example given in the previous problem, assume that Germany and Japan produce their own cars and beer and allocate half their labor force to the production of each.
a. What quantities of cars and beer does Germany produce? What quantities does Japan produce? Now suppose that Germany and Japan produce only the good for which they enjoy a comparative advantage in production. They also agree to trade half of their output for half of what the other country produces.
b. What quantities of cars and beer does Germany produce now? What quantities does Japan produce?
c. What quantities of cars and beer does Germany consume now? What quantities does Japan consume?
d. People often act as if international trade is a zero-sum game. State this book's foundational principle that contradicts this idea.