China Production Possibilities Product A B D E F 120, 000 96,000 |72,000 48,000 24,000 96 120 Apparel Chemicals(tons) 24 48 72 U.S. Production Possibilities Product U V W 40,000 32,000 24,000 16,0000 8,000 0 64 80 Apparel Chemicals (tons) 16 32 48 c. What are the limits of the terms of trade? Ounits of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals. Suppose that the actual terms of trade are 1,000 units of apparel for 12 tons of chemicals and that 16,000 units of apparel are exchanged for 24 tons of chemicals. What are the gains from specialization and trade for each nation? China - has a gain of units of apparel.
China Production Possibilities Product A B D E F 120, 000 96,000 |72,000 48,000 24,000 96 120 Apparel Chemicals(tons) 24 48 72 U.S. Production Possibilities Product U V W 40,000 32,000 24,000 16,0000 8,000 0 64 80 Apparel Chemicals (tons) 16 32 48 c. What are the limits of the terms of trade? Ounits of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals. Suppose that the actual terms of trade are 1,000 units of apparel for 12 tons of chemicals and that 16,000 units of apparel are exchanged for 24 tons of chemicals. What are the gains from specialization and trade for each nation? China - has a gain of units of apparel.
Chapter28: International Trade
Section: Chapter Questions
Problem 16P
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