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According to the U.S. Census Bureau, in July 2006 the United States exported aircraft worth $1 billion to China and imported aircraft worth only $19,000 from China. During the same month, however, the United States imported $83 million worth of men’s trousers, slacks, and jeans from China but exported only $8,000 worth of trousers, slacks, and jeans to China. Using what you have learned about how trade is determined by comparative advantage, answer the following questions.
a. Which country has the comparative advantage in aircraft production? In production of trousers, slacks, and jeans?
b. Can you determine which country has the absolute advantage in aircraft production? In production of trousers, slacks, and jeans?
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