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2007-11-06 12:25 am
Suppose that in a year an American worker can produce 200 pillows while a China worker can produce 200 pillows or 18 televisions.

Without trade, China and the U.S.A. use half of their resources in producing both goods. If China and the U.S.A. agree to trade at a set of relative prices 10:1 (10 pillows exchange for one television) and 100 pillows are traded, calculate the gains from trade of both countries.
更新1:

更正題目:  Suppose that in a year an American worker can produce 200 pillows or 30 televisions, while a China worker can produce 200 pillows or 18 televisions. 我計黎計去,個gain from trade都唔係+囉.. 點解會咁既..?? 同埋我想問:american係未應該出口pillows, 而china就出口television呀?

回答 (2)

2007-11-06 3:04 pm
✔ 最佳答案
In USA, the resources to produce 1 tv = 6.67 pillows
In China, the resources to produce 1 tv = 11.11 pillows

USA has a comparative advantage in producing tv and China must have a comparative advantage in producing pillows.

By the law of comparative advantages, USA will export tv and China will export pillows.

As long as the term of trade is between 6.67 pillows and 11.11 pillows for 1 tv, both countries will gain from trade. There both countries will gain from 10 pillows for 1 tv.

The gains from trade depend on how much is traded. Without that information, you cannot tell the total gains from trade.

You can tell that by exporting 1 tv, USA gains 3.33 pillows because she gets 10 pillows intead of only 6.67 by producing it herself.

By importing 1 tv, China gains 1.11 pillows becuase she needs only export 10 pillows instead of giving up 11.11 pillows if she produces the tv herself.

2007-11-06 07:11:42 補充:
Oh, I missed that you mentioned 100 pillows are traded.For USA, she only produces tv and can procude 30 tvBefore trade, produces 100 pillows and 15 tvAfter trade, gets 100 pillows and 20 tv (10 exported for 100 pillows)USA gains of trade is 5 tv

2007-11-06 07:16:15 補充:
For China,she only produces pillows and can produce 200.Before trade, produces 100 pillows and 9 tv.After trade, has 100 pillows and 10 tv (export 100 pillows for 10 tv)China's gain from trade is 1 tv.

2007-11-06 07:44:18 補充:
To 樓上,How can 233 pillows be produced unless BOTH countries produce pillows?
2007-11-06 1:13 am
A= America C= China p=pillows t= televisions
(1) In America 200p = 30t therefore 100p= 15t
(2) In China 200p = 18t therefore 100p = 9t
(3) Price 10p = 1t therefore 100p = 10t
(4) An export of 10t to C got 100p from C
(5) In America, total output 30t - export 10t = 20t which exchanged 100p
As mentioned in (1) balance 20t in America equivalent to 100p / 15 x20 = 133 1/3p
Therefore, total pillows after trade are 133p + 100p = 233p that is more than before.
(6)In China, total output 200p - 100p = 100p which exchanged 10t
As mentioned in (2), balance 100p in China valued 9t.
Therefore, total tv after trade are 10t + 9t = 19t that is more than before

International trade of different pricing can make both countries obtaining gains.

2007-11-06 08:11:47 補充:
Total pillows is only a value after trade, as well as America gained tv in your explanation. In fact, America would get 100 pillows from China. Therefore, your answer is more or less same as me. Let the host choose free.


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