Figure 3.1China - US Trade Possibilities

question 79

Multiple Choice

Figure 3.1China - US Trade Possibilities

-Considering Figure 3.1 prior to trade both China's and the US production of textiles and aircraft is 19 and 9.Which of the following represents the pre-trade situation?

• A) China has a comparative advantage in the production of textiles and the US has a comparative advantage in the production of aircraft.
• B) China has a comparative advantage in the production of aircraft and the US has a comparative advantage in the production of textiles.
• C) China has an absolute advantage in the production of both textiles and aircraft.
• D) The US has an absolute advantage in the production of both textiles and aircraft.

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Definitions:

Retail Price

The price at which a product is sold to the public, usually after including costs of production, distribution, and a markup for profit.

Ensure Freshness

Measures or practices used to maintain the quality and safety of perishable products.

Refrigerator

An electrical appliance used for keeping food and drinks cold, playing a crucial role in modern food preservation and safety.

Double Marginalization

A situation in a supply chain where both the manufacturer and retailer mark up prices above their marginal costs, leading to inefficiencies.