China and America can each produce 100 million shirts a year. America can produce 20 million computers a year, whereas China can produce 10 million computers a year.
A) Who has the absolute advantage in each good?
B) What is the opportunity cost for each country for computers?
C) what is the opportunity cost for each country for shirts?
D) Assume that both countries are splitting their resources equally between computers and shirts. How many computers total would be produced? How many shirts total would be produced?
E) now assume each country specializes in the good for which they have the comparative advantage. they agree trade half of what of what they produce to each other. what it the impact of this argument on both countries?