I don't need the answers to be too detailed but straight to the point and why with a decent explanation.
- Suppose that china and the U.S produce only 2 goods: Sneakers and computers. The table below shows the number of hours necessary to produce one unit of each good in both countries.
Sneakers I Computers
China 5 hours 100 hours
EUA 3 hours 50 hours
a: According to the absolute advantage theory of Adam Smith, is it possible to have trade between the 2 countries?
b: According to the comparative advantage theory of David Ricardo, is it possible to have trade between the 2 countries?
c: If yes, which trade policy is the best? Which country should specialize in what? Justify your answer.
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