MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 20, Problem 3DQ
To determine
Theproductive efficiency.
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3. 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. LO20.2
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?
c. What are the limits of the terms of
trade? Suppose that the actual terms
of trade are 1 unit of apparel for 1 unit
of chemicals and 4 units of apparel for
6 units of chemicals. What are the
gains from specialization and trade for
each nation?
China Production Possibilities
Product
A
D
F
Apparel (in thousands)
30
24
18
12
Chemicals (in tons)
12
18
24
30
U.S. Production Possibilities
Product
R
T.
V
Apparel (in thousands)
hemicals (in tons)
10
8.
4
4
8.
12
16
20
p. 579
5. Suppose that the comparative-cost ratios of two products-
baby formula and tuna fish-are as follows in the hypotheti-
cal nations of Canswicki and Tunata:
Canswicki: 1 can baby formula = 2 cans tuna fish
1 can baby formula = 4 cans tuna fish
Tunata:
In what product should each nation specialize? Explain why
terms of trade of 1 can baby formula =
would be acceptable to both nations.
25 cans tuna fish
American apparel makers complain to Congress about competition from China. Congress decides to impose either a tariff or a quota on apparel imports from China. Which policy would Chinese apparel manufacturers prefer? LO26.4 a. Tariff. b. Quota.
Chapter 20 Solutions
MACROECONOMICS W/CONNECT
Ch. 20.2 - Prob. 1QQCh. 20.2 - Prob. 2QQCh. 20.2 - Prob. 3QQCh. 20.2 - Prob. 4QQCh. 20 - Prob. 1DQCh. 20 - Prob. 2DQCh. 20 - Prob. 3DQCh. 20 - Prob. 4DQCh. 20 - Prob. 5DQCh. 20 - Prob. 6DQ
Ch. 20 - Prob. 7DQCh. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQCh. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Prob. 3RQCh. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - Prob. 6RQCh. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - Prob. 9RQCh. 20 - Prob. 10RQCh. 20 - Prob. 11RQCh. 20 - Prob. 12RQCh. 20 - Prob. 13RQCh. 20 - Prob. 1PCh. 20 - Prob. 2PCh. 20 - Prob. 3PCh. 20 - Prob. 4P
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