Figure 2Textiles (labor intensive)22019-China PPFTerms of Trade20US PPFAircraft (capital intensive)3. a. Referring to the Comparative Advantage Theory, in Figure 2 which product shouldU.S. be specialized in? Which product should China be specialized in? Why?b. What are the production bundles of both countries after specialization? Do they end upin a complete specialization or an incomplete specialization? Why?c. With international trade between China and U.S., assume point A is the after-tradeconsumption bundle for both countries. Which product would China export and import,and what are the quantities? Which product would U.S. export and import, and what arethe quantities?d. Would countries be better-off after trade? Why?I

Comparative advantage is the situation at which a country has ability to produce a good at lower…

ring to the Comparative Advantage Theory, in Figure 2 which product should specialized in? Which product should China be specialized in? Why? are the production bundles of both countries after specialization? Do they end up mplete specialization or an incomplete specialization? Why? international trade between China and U.S., assume point A is the after-trade aption bundle for both countries. Which product would China export and import, at are the quantities? Which product would U.S. export and import, and what are ntities? Id countries be better-off after trade? Why?

ring to the Comparative Advantage Theory, in Figure 2 which product should specialized in? Which product should China be specialized in? Why? are the production bundles of both countries after specialization? Do they end up mplete specialization or an incomplete specialization? Why? international trade between China and U.S., assume point A is the after-trade aption bundle for both countries. Which product would China export and import, at are the quantities? Which product would U.S. export and import, and what are ntities? Id countries be better-off after trade? Why?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 4SCQ: In Germany it takes three workers to make one television and four workers to make one video camera....

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Similar questions

Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
Does intra-industry trade contradict the theory of comparative advantage?
How does comparative advantage lead to gains from trade?
If trade increases world GDP by 1 per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lankas GDP.
Under what conditions does comparative advantage lead to gains from trade?
In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?
Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.
You just overheard your friend say the following: Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade. How would you respond?