1. South Korea can produce 2 cars or 5 computers in one hour. Japan can produce 1 car or 2 computers in one hour.
a. Which country has the comparative advantage in making cars? Which country has the comparative advantage in making computers?
b. Are the following rates of exchange beneficial to both nations: 1 car for 2.5 computers. Explain. (Hint: Graph the domestic productions possibilities with and without trade for each country.