3. The costs of ocean transportation includes (1) capital (the cost of the ship), (2)fuels, and (3) labor. Since different ships use similar fuels the most important costs of the ocean transportation are labor and capital. Look at the following example: Speed of small ships Speed of large ships Chinese ships 11.46 13.81 British ships 14.00 14.04 European ships 14.86 14.93 Among the three countries in the table, China has the lowest labor cost, Britain is the second and Europe has the highest labor cost. 

(1) What is the difference between fast ships and slow ships in terms of the cost of building and Maintenance? 

(2) Why does Europe choose to have fast ships while China chooses to have slow ships? Is the choice made by the Chinese rational in terms of economic principles.

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