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 D and for the United States is alternative S. China Production Possibilities Product B D E F A 20,000 16,000 0 8 Apparel Chemicals (tons) C 12,000 16 0 8,000 24 4,000 32 40 U.S. Production Possibilities Product T U V W Apparel R S 60,000 48,000 0 12 0 36,000 24,0000 24 36 12,000 48 Chemicals (tons) 60 Instructions: Enter your answers as whole numbers. a. Are comparative-cost conditions such that the two countries should specialize? (Click to select) If so, what product should each produce? China should produce [(Click to select) The United States should produce [(Click to select) b. What is the total gain in apparel and chemical output that would result from such specialization? Apparel: units ton(s) Chemicals: c. What are the limits of the terms of trade? units of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals.

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 D and for the United States is alternative S. China Production Possibilities Product B D E F A 20,000 16,000 0 8 Apparel Chemicals (tons) C 12,000 16 0 8,000 24 4,000 32 40 U.S. Production Possibilities Product T U V W Apparel R S 60,000 48,000 0 12 0 36,000 24,0000 24 36 12,000 48 Chemicals (tons) 60 Instructions: Enter your answers as whole numbers. a. Are comparative-cost conditions such that the two countries should specialize? (Click to select) If so, what product should each produce? China should produce [(Click to select) The United States should produce [(Click to select) b. What is the total gain in apparel and chemical output that would result from such specialization? Apparel: units ton(s) Chemicals: c. What are the limits of the terms of trade? units of apparel for 1 ton of chemicals and units of apparel for 2 tons 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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