Question Completion Status: 25% (0.25) 45% 55% (0.59) (0.72) US US (total size = 1) (total size = 1.3) 40% (0.56) 50% 50% (0.5) (0.5) 60% (0.84) China (total size=1) China (total size = 1.4) Wages (labour's slice of the pie) Profits (capital's slice of the pie) Specialization means that China will produce all the capital-intensive goods China's shift into labour-intensive electronics has raised labour's share of China's larger ple, and reduced the share of profits. Therefore, only workers are in a better position in China Workers are worse-off in the USA because the US workers' slice is not only proportionally smaller but also smaller in absolute size This is a win-win situation both for workers and employers (owners of capital) in the USA 75% (0.75) 30% growth 40% growth Eigure 18 20 is a diagram that describes the effects of trade on the employers and the workers in the US and China. The initial size of each economy is normalized to one The US has the comparative advantage in the capital-intensive goods, while China has the comparative advantage in the labour-intensive goods. As a result of trade the US's economy is assumed to grow by 30% and that of China by 40% Based on this information, which of the following statement is true? With limited trade With greater trade 25% (0.25) 45% 30% (0.59) growth 55% (0.72) US (total size = 1.3) 75% (0.75) US (total size= 1) 13
Question Completion Status: 25% (0.25) 45% 55% (0.59) (0.72) US US (total size = 1) (total size = 1.3) 40% (0.56) 50% 50% (0.5) (0.5) 60% (0.84) China (total size=1) China (total size = 1.4) Wages (labour's slice of the pie) Profits (capital's slice of the pie) Specialization means that China will produce all the capital-intensive goods China's shift into labour-intensive electronics has raised labour's share of China's larger ple, and reduced the share of profits. Therefore, only workers are in a better position in China Workers are worse-off in the USA because the US workers' slice is not only proportionally smaller but also smaller in absolute size This is a win-win situation both for workers and employers (owners of capital) in the USA 75% (0.75) 30% growth 40% growth Eigure 18 20 is a diagram that describes the effects of trade on the employers and the workers in the US and China. The initial size of each economy is normalized to one The US has the comparative advantage in the capital-intensive goods, while China has the comparative advantage in the labour-intensive goods. As a result of trade the US's economy is assumed to grow by 30% and that of China by 40% Based on this information, which of the following statement is true? With limited trade With greater trade 25% (0.25) 45% 30% (0.59) growth 55% (0.72) US (total size = 1.3) 75% (0.75) US (total size= 1) 13
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question Completion Status:
25%
(0.25)
45%
55%
(0.59)
(0.72)
US
US
(total size = 1)
(total size = 1.3)
40%
(0.56)
50% 50%
(0.5)
(0.5)
60%
(0.84)
China
(total size=1)
China
(total size = 1.4)
Wages (labour's slice of the pie)
Profits (capital's slice of the pie)
Specialization means that China will produce all the capital-intensive goods
China's shift into labour-intensive electronics has raised labour's share of China's larger ple, and reduced the share of profits.
Therefore, only workers are in a better position in China
Workers are worse-off in the USA because the US workers' slice is not only proportionally smaller but also smaller in absolute size
This is a win-win situation both for workers and employers (owners of capital) in the USA
75%
(0.75)
30%
growth
40%
growth
Transcribed Image Text:Eigure 18 20 is a diagram that describes the effects of trade on the employers and the workers in the US and China. The initial size of each
economy is normalized to one The US has the comparative advantage in the capital-intensive goods, while China has the comparative
advantage in the labour-intensive goods. As a result of trade the US's economy is assumed to grow by 30% and that of China by 40%
Based on this information, which of the following statement is true?
With limited trade
With greater trade
25%
(0.25)
45%
30%
(0.59)
growth
55%
(0.72)
US
(total size = 1.3)
75%
(0.75)
US
(total size=
1)
13
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