Although relations between the United States and China have declined over national security concerns, the Wall Street

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Although relations between the United States and China have declined over national security concerns, the Wall Street Journal reported that the United States imported $536.8 billion of goods from China in 2022, an increase of 6.3 percent from 2021. “China is a dominant supplier of many products that are in demand in the U.S., including cellphones, personal computers and solar panels,” Ed Gresser, a former assistant U.S. trade representative explained. “A very large and integrated trade and investment relationship . . . has a tendency to weather political ups and downs. . . . China . . . can provide very large quantities of products in a short amount of time.” Assume that China has a comparative advantage relative to the United States in the production of water bottles.

a. Compared to the United States, must China have an absolute advantage in the production of water bottles?

b. Compared to China, could the United States have an absolute advantage in the production of water bottles?

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Macroeconomics

ISBN: 9780138102494

9th Edition

Authors: Glenn Hubbard, Anthony Patrick O Brien

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