Business, 26.08.2019 19:00 bentonknalige

The following hypothetical production possibilities tables are for china and the united states. assume that before specialization and trade the optimal product mix for china is alternative b and for the united states is alternative u.
china production possibilities
product a b c d e f
apparel 30,000 24,000 18,000 12,000 6,000 0
chemicals (in tons) 0 6 12 18 24 30
u. s. production possibilities
product r s t u v w
apparel 10,000 8,000 6,000 4, 2,000 0
chemicals (in tons) 0 4 8 12 16 20
instructions: enter your answers as whole numbers.
(a) are comparative-cost conditions such that the two countries should specialize?
if so, what product should each produce?
(b) what is the total gain in apparel and chemical output that would result from such specialization?
apparel: units.
chemicals: tons.
(c) what are the limits of the terms of trade?
units of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals.
(d) suppose that the actual terms of trade are 1 unit of apparel for 1½ units of chemicals and that 4,000 units of apparel are exchanged for 6 units of chemicals. what are the gains from specialization and trade for each nation?
the united states or china has a gain of units of apparel.
the united states or china has a gain of tons of chemicals.

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