Trade at France's Domestic Price. This problem illustrates an example of trade induced by comparative advantage. It assumes that China and France each have 1,000 production units. With one unit of production (a mix of land, labor, capital, toys, but equally efficient when producing wine. Assume at first that no trade takes place. China allocates 800 production units to building toys and 200 production units to producing wine. France allocates 200 production units to building toys and . 15 6 cases . 800 production units to producing wine. a. What is the production and consumption of China and France without trade? b. Assume complete specialization, where China produces only toys and France produces only wine. What would be the effect on total production? c. France's domestic price is 3 containers of toys equals 6 cases of wine. Assume China produces 15,000 containers of toys and exports 600 containers to France. Assume France in turn produces 6,000 cases of wine and exports 1,200 cases to China. What happens to total production and consumption? a. What is the production and consumption of China and France without trade? Calculate the production and consumption of China and France without trade below: (Round to the nearest integer.) Toys Production if there is no trade CHINA Allocated production units to Produces and consumes (output per unit * units allocated) FRANCE Allocated production units to Produces and consumes (output per unit x units allocated) Total production and consumption across both countries Trade at France's Domestic Price. This problem illustrates an example of trade induced by comparative advantage. It assumes that China and France each have 1,000 production units. With one unit of production (a mix of land, labor, capital, toys, but equally efficient when producing wine. Assume at first that no trade takes place. China allocates 800 production units to building toys and 200 production units to producing wine. France allocates 200 production units to building toys and . 15 6 cases . 800 production units to producing wine. a. What is the production and consumption of China and France without trade? b. Assume complete specialization, where China produces only toys and France produces only wine. What would be the effect on total production? c. France's domestic price is 3 containers of toys equals 6 cases of wine. Assume China produces 15,000 containers of toys and exports 600 containers to France. Assume France in turn produces 6,000 cases of wine and exports 1,200 cases to China. What happens to total production and consumption? a. What is the production and consumption of China and France without trade? Calculate the production and consumption of China and France without trade below: (Round to the nearest integer.) Toys Production if there is no trade CHINA Allocated production units to Produces and consumes (output per unit * units allocated) FRANCE Allocated production units to Produces and consumes (output per unit x units allocated) Total production and consumption across both countries
