QUESTION 28 Figure 6: a two good, Textiles and Aircraft, two country, US and Chi

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QUESTION 28 Figure 6: a two good, Textiles and Aircraft, two country, US and China, model. The graphs below show that PPF for each country. Figure 2 represents the Equilibrium for each country when they participate in International Trade. Line tt is the Trading Possibility Line and the absolute value of its slope is the terms of trade. Line tt is tangent to the PpF for the us at point M and to the US Community Indifference curve CICUS at point E 1 n tt is tangent to the PPF for China at point A and to China's Community Indifference Curve ac china at point C Textiles ( labor intensive) Tuxtles (labor intensive) China Terms of Trade= 1 US 13 China MRT- 1 at point B Terms of Trade PPF US MRT at point N CICChina CiCus IPPF 15 Aircraft (capital intensive) Aircrat (captal intensive) If the terms of trade (relative price of Aircraft in terms of Textiles) is 1 Textle how much of both goods do the US and China produce? O A us produces 7 Aircraft and 6 Textiles. China produces 7 Aircraft and 6 Textiles. ( B us produces 15 Arcraft and 1 Texties China produces 3 Aircraft and 13 Textiles. US produces g Aircraft and 7 Tecties. China produces 9 Aircraft and 7 Textiles. O D us produces 15 Aircraft and 1 Textiles. China produces 9 Arcraft and 7 Textiles.

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