Problem 16-03 (Algo) The following are production-possibilities tables for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative D and for the United States alternative S. China Production-Possibilities Product Apparel (in thousands) 48 32 24 16 Chemicals (in tons) United States Production-Possibilities Product Apparel (in thousands) 128 86 12 Chemicals (in tons) 20 a. Are comparative cost conditions such that the two countries should specialize? | Yes O If so, what product should each produce? China should produce chemicals . United States should produce |apparel . b. What is the total gain in apparel and chemical output that would result from such specialization? Instructions: Enter your responses as whole numbers. Apparel: 8 thousand units Chemicals: 8 tons c. What are the limits of the terms of trade? Limits of the terms of trade = 1 thousand units of apparel for | 24 @ ton of chemicals and 1 thousand units of apparel for | 24 @ tons of chemicals. Suppose that the actual terms of trade are 1 unit of apparel for 112 units of chemicals and that 16 thousand units of apparel are exchanged for 24 units of chemicals. What are the gains from specialization and trade for each nation? Gain of 8000 @ thousand units of apparel and | 8 @ tons of chemicals.Problem 16-03 (Algo) The following are production-possibilities tables for China and the United States. Assume that before specialization and trade the optimal product mix for China is alternative D and for the United States alternative S. China Production-Possibilities Product D E Apparel (in thousands) 40 32 24 16 Chemicals (in tons) 16 32 48 64 United States Production-Possibilities Product V Apparel (in thousands) 128 96 24 72 48 24 Chemicals (in tons) 96 129 a. Are comparative cost conditions such that the two countries should specialize? | Yes If so, what product should each produce? China should produce chemicals United States should produce |apparel b. What is the total gain in apparel and chemical output that would result from such specialization? Instructions: Enter your responses as whole numbers. Apparel: | 8 thousand units Chemicals: B tons c. What are the limits of the terms of trade? Limits of the terms of trade = 1 thousand units of apparel for | 1 @ ton of chemicals and 1 thousand units of apparel for 2 tons of chemicals. Suppose that the actual terms of trade are 1 unit of apparel for 12 units of chemicals and that 16 thousand units of apparel are exchanged for 24 units of chemicals. What are the gains from specialization and trade for each nation? Gain of |8 @ thousand units of apparel and | 8 @ tons of chemicals