If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy of reducing or eliminating imports of rice into their country would include:
a. Japan will be able to consume a combination of rice and other goods' consumption beyond their domestic production possibilities curve.
b. the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall.
c. the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall.
d. the price of rice in Japan will fall.
b
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If the social cost of producing a good exceeds the private cost,
A) a negative externality exists. B) no externalities exist. C) a positive externality exists. D) the market is efficient.
While Modigliani's LCH is similar to Friedman's PIH in several ways, it does differ in that it
A) assumes individuals base their consumption decisions on a time span greater than one year. B) assumes that individuals prefer to maintain a stable consumption pattern. C) attempted to reconcile the seemingly paradoxical cross-section and time-series empirical data. D) gives an important role to assets as a determinant of consumption behavior.