Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 3 - Part I - Interdependence and the Gains from Trade - Quick Check Multiple Choice: 5

Answer

b.) China will export shirts, and the United States will export aircraft.

Work Step by Step

In China, the opportunity cost of producing an aircraft is 10,000 shirts. In the U.S., the opportunity cost of producing an aircraft is 5,000 shirts. The U.S. therefore has a comparative advantage in producing aircraft and a comparative disadvantage in producing shirts. Therefore, China will export shirts and the U.S. will export aircraft.
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