Consider the following fixed labor coefficients (output per unit of labor) required to produce steel and aircraft in China and the U.S. Aircraft Steel U.S. 4 2 China 2 3 (8) A. Suppose China has a fixed supply of labor (L) equal to 12 hours. Using the above data : 1) What quantity of steel (Qs) could China produce if 0 hours of labor were used to produce aircraft ? Qs = __- 2) What quantity of aircraft (QA) could China produce if 0 hours of labor were used to produce steel ? QA = 3) Solve for the values of the pretrade (autarky) price of aircraft relative to steel (PA/Ps) for the U.S. and China. (PA/PS) US = (PA/P's ) Ch = 4) Suppose China consumes 18 steel and 12 cloth in autarky. What quantities of steel and cloth will be produced in autarky? Qs = ___ , QA =_ (8) B. Using your answers (and data) in Part A: 1) Based on your results what is the pattern of comparative advantage? (which good will each country import and export?) 2) Choose an "appropriate" value for the world price of aircraft relative to steel that might result in a free trade (world) equilibrium : (PA/PS )w = 3) What quantities of aircraft and steel will China actually produce in trade ? (Qs ) = ( QA ) T = _ _ 4). Suppose China is consuming 20 steel and 16 cloth under free trade. Solve for the quantity (and good) of Chinese exports and imports : Exports (X) = , Imports (M) = (7) C. 1. Using the data provided to you in Parts A and B identify (not explain) the gains from trade for China (One sentence). 2. Suppose (PA/Ps )w settled above the value you selected in Part B.2. Would China's gains from trade increase or decrease? 3. Explain why China's gains from trade increase or decrease (explain your answer in Part 2)