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Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. China and Russia are trading partners. Both countries have the same amount of resources and can produce bulldozers and/or trucks. The production possibilities curves below show the combination of bulldozers and trucks that each country can produce Trucks (units) China's PPC Russia's PPO O 40 Bulldozers (units) (a) Assume that prior to trade, Russia is producing 0 units of bulldozers and 10 units of trucks. What can you conclude about the use of resources in Russia? Explain using the production possibilities curve model. (b) Which country has the comparative advantage in the production of bulldozers? Explain using numbers. (c) Now assume each country specializes in the production of the good in which it has a comparative advantage, and the terms of trade are 5 units of bulldozers for 1 unit of trucks. Will Russia gain from trade? Explain. (d) Assume Russia and China are able to double the production of bulldozers. Which country now has the absolute advantage in the production of bulldozers? Explain using numbers. (e) Assume China's civilian working-age population is 125 million, the labor force participation rate in China is 80%, and the unemployment rate is 8%. Calculate the number of unemployed people in China. Show your work
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