b. What is the total gain in apparel and chemical output that would result from such specialization?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 O 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 forton(s) of chemicals (from China's position)1 unit of apparel forton(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 ofapparel for 6 tons of chemicals. What are the gains from specialization and trade for each nation?China has a gain ofunit(s) of apparel vThe United States has a gain ofton(s) of chemicals v The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization andtrade 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 itemsand 1 unit of chemicals is 1 ton.]China Production PossibilitiesProductAEFin thousands)ApparelChemicals (in tons)3024181212182430U.S. Production PossibilitiesProductRSTUVWApparel (in thousands)Chemicals (in tons)10864248121620Instructions: Enter your answers as whole numbers.a. Are comparative-cost conditions such that the two areas should specialize?YesIf so, what product should each produce?China should produce apparelThe United States should produce chemicals

ns of trade? ve up) is ] unit(s) of apparel for 1 ton of chemicals. wvill trade (give up) is [ ]ton(s) of chemicals for 1 unit of apparel. nge, or limits, of the terms of trade: ton(s) of chemicals (from China's position) ton(s) of chemicals (from the U.S. position) of trade are 1 unit of apparel for 1½ tons of chemicals, and that the amount exchanged is 4 units of What are the gains from specialization and trade for each nation? |unit(s) of apparel of ton(s) of chemicals ♥

ns of trade? ve up) is ] unit(s) of apparel for 1 ton of chemicals. wvill trade (give up) is [ ]ton(s) of chemicals for 1 unit of apparel. nge, or limits, of the terms of trade: ton(s) of chemicals (from China's position) ton(s) of chemicals (from the U.S. position) of trade are 1 unit of apparel for 1½ tons of chemicals, and that the amount exchanged is 4 units of What are the gains from specialization and trade for each nation? |unit(s) of apparel of ton(s) of chemicals ♥

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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nave a n ab je in bothi good because they both produce boots and shirts. 40- 38- 36- B. Neither country has an absolute advantage in both goods because the United States can produce more boots but Canada can produce more shirts. 34- 32- 30- 28- 26- 24- 22- 20- 18- 16- 14- 12- 10- 8- C. The United States has an absolute advantage in both goods because it can produce more boots and more shirts. PPFUS. D. Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts. O E. Canada has an absolute advantage in both goods because it can produce more boots and more shirts. US 6- Suppose initially that the United States is consuming 4 boots and 8 shirts and Canada is consuming 18 boots and 2 shirts, as indicated in the figure. Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative advantage and then trade. In particular, suppose the United States trades…
Figure 9-1 The figure illustrates the market for coffee in Guatemala 130 88888888 140 130 120- 110 100 90 70+ S 50 RRS 40 30 89 20 10- Price & 12 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 9. Refer to Figure 9-1. With trade, Guatemala will a. export 22 units of coffee b. export 10 units of coffee. c. import 30 units of coffee. d. import 12 units of coffee. Domestic supply World price Domestic demand + 42 44 46 48 50 52 Quantity