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c. What are the limits of the terms of trade? The most China will trade (give up) is unit(s) of apparel for 1 ton of chemicals. The most the United States will trade (give up) is ton(s) of chemicals for 1 unit of apparel. This implies the following range, or limits, of the terms of trade: 1 unit of apparel for ton(s) of chemicals (from China's position) 1 unit of apparel for| ton(s) of chemicals (from the U.S. position) Suppose that the actual terms of trade are 1 unit of apparel for 1½ tons of chemicals, and that the amount exchanged is 4 units of apparel for 6 tons of chemicals. What are the gains from specialization and trade for each nation? China has a gain of unit(s) of apparel v The United States has a gain of ton(s) of chemicals v

c. What are the limits of the terms of trade? The most China will trade (give up) is unit(s) of apparel for 1 ton of chemicals. The most the United States will trade (give up) is ton(s) of chemicals for 1 unit of apparel. This implies the following range, or limits, of the terms of trade: 1 unit of apparel for ton(s) of chemicals (from China's position) 1 unit of apparel for| ton(s) of chemicals (from the U.S. position) Suppose that the actual terms of trade are 1 unit of apparel for 1½ tons of chemicals, and that the amount exchanged is 4 units of apparel for 6 tons of chemicals. What are the gains from specialization and trade for each nation? China has a gain of unit(s) of apparel v The United States has a gain of ton(s) of chemicals v

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Apparel: |unit(s) Chemicals: unit(s) c. What are the limits of the terms of trade? The most China will trade (give up) is unit(s) of apparel for 1 ton of chemicals. The most the United States will trade (give up) is ton(s) of chemicals for 1 unit of apparel. This implies the following range, or limits, of the terms of trade: 1 unit of apparel for ton(s) of chemicals (from China's position) 1 unit of apparel for ton(s) of chemicals (from the U.S. position) Suppose that the actual terms of trade are 1 unit of apparel for 12 tons of chemicals, and that the amount exchanged is 4 units of apparel for 6 tons of chemicals. What are the gains from specialization and trade for each nation? China has a gain of unit(s) of apparel The United States has a gain of ton(s) of chemicals v
Transcribed Image Text:Apparel: |unit(s) Chemicals: unit(s) c. What are the limits of the terms of trade? The most China will trade (give up) is unit(s) of apparel for 1 ton of chemicals. The most the United States will trade (give up) is ton(s) of chemicals for 1 unit of apparel. This implies the following range, or limits, of the terms of trade: 1 unit of apparel for ton(s) of chemicals (from China's position) 1 unit of apparel for ton(s) of chemicals (from the U.S. position) Suppose that the actual terms of trade are 1 unit of apparel for 12 tons of chemicals, and that the amount exchanged is 4 units of apparel for 6 tons of chemicals. What are the gains from specialization and trade for each nation? China has a gain of unit(s) of apparel The United States has a gain of ton(s) of chemicals v
The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative B and for the United States is alternative U. [Note: 1 unit of apparel is 1,000 items and 1 unit of chemicals is 1 ton.] China Production Possibilities Product A B D E F Apparel (in thousands) Chemicals (in tons) 30 24 18 12 6 6 12 18 24 30 U.S. Production Possibilities Product R V W Apparel (in thousands) 10 8 6 4 2 Chemicals (in tons) 4 8 12 16 20
Transcribed Image Text:The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative B and for the United States is alternative U. [Note: 1 unit of apparel is 1,000 items and 1 unit of chemicals is 1 ton.] China Production Possibilities Product A B D E F Apparel (in thousands) Chemicals (in tons) 30 24 18 12 6 6 12 18 24 30 U.S. Production Possibilities Product R V W Apparel (in thousands) 10 8 6 4 2 Chemicals (in tons) 4 8 12 16 20
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