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1. (Chapter 4) The US and China produce aircrafts (A) and cloths (C), using capital (K) and labor (L). The US is K-abundant relative to
1. (Chapter 4) The US and China produce aircrafts (A) and cloths (C), using capital (K) and labor (L). The US is K-abundant relative to China and aircrafts are K-intensive relative cloths. Assume that the two countries have identical demand preferences and technology used in production. (1) Draw PPF for each nation in a single graph with C on the horizontal axis, and indicate both countries' autarky equilibrium (AChina and AUS) and autarky price line (PChina and PUS).
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