-Based on the information in Table 35.1,assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods.For trade to be mutually beneficial for both countries,the terms of trade will be such that 1 computer will exchange for

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Quizplus · Accepted Answer

According to Table 35.1, China has a comparative advantage in producing soybeans while the United States has a comparative advantage in producing computers. In order for trade to be mutually beneficial, the terms of trade must lie between the opportunity costs of both countries. The opportunity cost of producing one computer in China is 3 tons of soybeans, while the opportunity cost of producing one computer in the United States is 1/3 of a ton of soybeans. Therefore, the terms of trade will lie somewhere between 1/3 and 3, which is encompassed in choice B.

-Based on the Information in Table 35