3. Considering Figure 3, prior to trade the production of textiles and aircraft for both China...

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3. Considering Figure 3, prior to trade the production of textiles and aircraft for both China and the U.S. are 19 and 9. Figure 3. An Example of China-U.S. Trade Possibilities Textiles (labor intensive) 20 19- 32 China PPF Terms of Trade 12 20 USPPF Aircraft (capital intensive) a) What types of opportunity costs represent Production Possibilities Frontiers for China and the U.S.? What does it mean for production of both goods in each country? b) Explain the pre-trade situation from the side of comparative advantage: which country has it, how much is it, and in which area? Support your statement with calculations. c) Which country is relatively labor-abundant, and which one is relatively capital- abundant? What does it mean? 3. Considering Figure 3, prior to trade the production of textiles and aircraft for both China and the U.S. are 19 and 9. Figure 3. An Example of China-U.S. Trade Possibilities Textiles (labor intensive) 20 19- 32 China PPF Terms of Trade 12 20 USPPF Aircraft (capital intensive) a) What types of opportunity costs represent Production Possibilities Frontiers for China and the U.S.? What does it mean for production of both goods in each country? b) Explain the pre-trade situation from the side of comparative advantage: which country has it, how much is it, and in which area? Support your statement with calculations. c) Which country is relatively labor-abundant, and which one is relatively capital- abundant? What does it mean?

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Answer a The opportunity cost represents the Production Possibilities Frontiers for China and the US ... View the full answer