Assume that tastes and technology are identical in China and Japan. Assume that China is labor abundant and Japan is capital abundant. Assume that production of clothing is labor abundant and Japan is capital abundant. Assume that production of clothing is labor intensive and production of automobiles is capital intensive.

a. Sketch the production possibilities frontiers for China and Japan. Explain briefly why your drew them as your did.

b. In autarky, which country has a comparative advantage in production of which good?

c. What does the Hecksher-Ohlin Theorem predict would happen of trade were opened between China and Japan?

d. Show and label the autarky and unrestricted-trade equilibria, production and consumption points, imports and exports, autarky price ratios and terms of trade.