Midterm1_v1_Fall2013_Solution

What pattern of trade would you predict now a if

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Unformatted text preview: at what price of computers (in terms of shirts) the two countries might trade. d) Suppose that China catches up with American productivity so that a Chinese worker can produce 100 shirts or 20 computers. What pattern of trade would you predict now? a) If, without trade, a U.S. worker spends half of his time producing each good, the United States will have 50 shirts and 10 computers. If, without trade, a worker in China spends half of his time producing each good, China will have 50 shirts and 5 computers. b) For the United States, the opportunity cost of 1 computer is 5 shirts, while the opportunity cost of a shirt is 1/5 computer. For China, the opportunity cost of 1 computer is 10 shirts, while the opportunity cost of 1 shirt is 1/10 computer. Therefore, the United States has a comparative advantage in the pr...
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This note was uploaded on 12/17/2013 for the course FILM & TV 106A taught by Professor Kuntz during the Fall '08 term at UCLA.

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