One July, the United States sold aircra worth $1 billion to China and bought aircra worth only

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One July, the United States sold aircra worth $1 billion to China and bought aircra worth only $19,000 from China. During the same month, however, the United States bought $83 million worth of menʼs pants, shorts, and jeans from China but sold only $8,000 worth of pants, shorts, and jeans to China. Using what you have learned about how trade is determined by comparative advantage, answer the following questions. 

a. Which country has the comparative advantage in aircra production? In production of pants, shorts, and jeans? 

b. Can you determine which country has the absolute advantage in aircra production? In production of pants, shorts, and jeans?

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Macroeconomics

ISBN: 9781319245269

6th Edition

Authors: Paul Krugman, Robin Wells

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