Question related to international trade

Assignment Help International Economics

Reference no: EM1376417

Scenario A:
China and Japan can produce calculators and noodles using land and capital in a competitive market. To produce one calculator 2 units of capital and 1 unit of land are required, while 1 lb of noodle production requires 1 unit of capital and 2 units of land. China has 100 units of land and 50 units of capital while Japan has 10 units of land and 40 units of capital.

7. Suppose China and Japan trade with each other corresponding to Scenario A. Identify the correct statement.

A. Chinese export noodles to Japan because China has more land and noodle production is land-intensive.
B. Chinese export calculators to Japan because China has more capital and calculator production is capital-intensive.
C. Chinese export noodles to Japan because it has more land per unit of capital and noodle production is land-intensive.
D. Chinese export pattern cannot be determined because prices of calculators and noodles are not given.

8. Under Scenario A, if China trades with Japan:

A. Chinese capitalists are better-off (compared to their no-trade situation).
B. Chinese landowners are better-off (compared to their no-trade situation).
C. Both capitalists and landowners are better-off in China (compared to no-trade).
D. Neither capitalists nor landowners are better-off in China (compared to no-trade).

Reference no: EM1376417

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