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Hello! Please answer the two questions BELOW. Thank you! Problem 40-03 (algo) The following hypothetical production possibilities tables are for China and the United States.
Hello! Please answer the two questions BELOW. Thank you!
Problem 40-03 (algo) The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative B and for the United States is alternative U. China Production Possibilities Product A B C D E F Apparel 60, 000 48, 000 36, 000 24, 000 12, 000 0 Chemicals ( tons) 0 12 24 36 48 60 U.S. Production Possibilities Product R S T U V W Apparel 20, 000 16, 000 12, 000 8, 0000 4, 000 0 Chemicals (tons) 0 8 16 24 32 40 Instructions: Enter your answers as whole numbers. a. Are comparative-cost conditions such that the two countries should specialize? Yes If so, what product should each produce? China should produce ( apparel The United States should produce ( chemicals b. What is the total gain in apparel and chemical output that would result from such specialization? Apparel: 4000 units Chemicals: 4 ton(s) c. What are the limits of the terms of trade? 1000 units of apparel for 1 ton of chemicals and 1000 units of apparel for 2 tons of chemicals.Suppose that the actual terms of trade are 1,000 units of apparel for 11/2 tons of chemicals and that 8,000 units of apparel are exchanged for 12 tons of chemicals. What are the gains from specialization and trade for each nationStep by Step Solution
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