An article in the Wall Street Journal explained that despite rising national security tensions between the United

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An article in the Wall Street Journal explained that despite rising national security tensions between the United States and China in 2023, trade between the two nations was rising.

“China is a dominant supplier of many products [to the United States] . . . including cellphones, personal computers and solar panels.” In the article, Ed Gresser, a former assistant U.S. trade representative, is quoted as stating, “China is very competitive at making things. They can provide very large quantities of products in a short amount of time.”

a. Can we conclude from this information that, relative to the United States, China has an absolute advantage or a comparative advantage in the production of cellphones, personal computers, and solar panels? Briefly explain, being sure to define absolute advantage and comparative advantage in your answer.

b. Is it possible that both the United States and China could have a comparative advantage in the production of personal computers? If so, explain how that could be true.

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Macroeconomics

ISBN: 9780138102494

9th Edition

Authors: Glenn Hubbard, Anthony Patrick O Brien

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