Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Textile Computer USA 3 4 CHINA 1 1 Assume there are two countries, China and the US, and t wo products, textiles and computers .

Textile Computer
USA 3 4
CHINA 1 1

Assume there are two countries, China and the US, and two products, textiles and computers. Assume the production coefficients in the above table, i.e., that the U.S. has an absolute advantage in both products, but that China has a comparative advantage in textiles. Both countries are populated with 100 workers. In a neatly drawn figure, depict the production possibility frontier for each country (with textiles on the y-axis) as well as a potential world price, and show how each country can gain from trade.

* I have done the PPF graph and need help as to determine the potential world price. Also grateful if you can explain me how each country can gain from trade.

Much appreciated.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Microeconomics

Authors: Robert Frank

7th Edition

1260111083, 9781260111088

More Books

Students also viewed these Economics questions

Question

=+c) Does this model improve on the model in Exercise 18? Explain.

Answered: 1 week ago

Question

1. To understand how to set goals in a communication process

Answered: 1 week ago