Answer to Question #20201 in Macroeconomics for CJ

Question

In one year, America can produce 100 shirts or 20 computers and China can produce 100 shirts or 10 computers. With trade, which country exports shirts? Which country benefits from the trade? Show production, trade, and consumption numbers in answer.

Answer 1

In America relative price for shirt is 0,2 of computer
In China relative price for shirt is 0,1 computer
Thus production in America is more expensive, so China Should exports shirts. Each country can benefit from this trade because they can focus on more profitable products.