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 A D E F Apparel Chemicals(tons) 20,000 16,000 |12,000 8,000 4,000 8 16 24 32 40 U.S. Production Possibilities Product R S T U V Apparel Chemicals(tons) 60,000 48,000 36,000 24,0000 12,000 12 24 36 48 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 Chemicals: |ton(s) 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. Suppose that the actual terms of trade are 1,000 units of apparel for 12 tons of chemicals and that 8,000 units of apparel are exchanged for 12 tons of chemicals. What are the gains from specialization and trade for each nation? (Click to select) Vhas a gain of units of apparel. (Click to select) Vhas a gain of ton(s) 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 A D E F Apparel Chemicals(tons) 20,000 16,000 |12,000 8,000 4,000 8 16 24 32 40 U.S. Production Possibilities Product R S T U V Apparel Chemicals(tons) 60,000 48,000 36,000 24,0000 12,000 12 24 36 48 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 Chemicals: |ton(s) 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. Suppose that the actual terms of trade are 1,000 units of apparel for 12 tons of chemicals and that 8,000 units of apparel are exchanged for 12 tons of chemicals. What are the gains from specialization and trade for each nation? (Click to select) Vhas a gain of units of apparel. (Click to select) Vhas a gain of ton(s) of chemicals.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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 D and for the United States is alternative S.
China Production Possibilities
Product
A
в
D
E
F
Apparel
Chemicals (tons)
|20,000
16,000
12,000
8,000
4,000
8
16
24
32
40
U.S. Production Possibilities
Product
R
S
T
U
V
W
Apparel
Chemicals(tons)
60,000
48,000
36,000
24,0000
12,000
12
24
36
48
60
Instructions: Enter your answers as whole numbers.
a. Are comparative-cost conditions such that the two countries should specialize?
(Click to select) V
If so, what product should each produce?
China should produce (Click to select) ♥
The United States should produce (Click to select) V
b. What is the total gain in apparel and chemical output that would result from such specialization?
Apparel:
units
Chemicals:
|ton(s)
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.
Suppose that the actual terms of trade are 1,000 units of apparel for 12 tons of chemicals and that 8,000 units of apparel are
exchanged for 12 tons of chemicals. What are the gains from specialization and trade for each nation?
(Click to select)
v has a gain of
units of apparel.
(Click to select)
V has a gain of
ton(s) of chemicals.
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