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Please answer all parts, thank you so much! Suppose that the United States and China can each produce shorts and wheat. The maximum quantities of

Please answer all parts, thank you so much!

Suppose that the United States and China can each produce shorts and wheat. The maximum quantities of each that can produced by each country are shown by the following table (in millions):

United States China

shirts / year 20 12

wheat / year 20 4

a) Find the opportunity cost of one shirt and one wheat for the United States and China.

b) Should the United States and China specialize in trade? Why or why not?

c) If your answer to b) is yes, then use PPCs and CPCs to show that each country would be better off through specialization and trade. Show graphically and explain.

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