$\begin{array}{|c|c|c|}
\hline \text { Country } & \text { Tons of Sovbeans } & \text { Computers } \
\hline \text { China } & 100 & 300 \
\hline \text { United States } & 150 & 750 \
\hline
\end{array}$

$\text {Table $35.1$}$
$\text {Full-Employment Output of Goods}$ 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

Question

$\begin{array}{|c|c|c|}
\hline \text { Country } & \text { Tons of Sovbeans } & \text { Computers } \
\hline \text { China } & 100 & 300 \
\hline \text { United States } & 150 & 750 \
\hline
\end{array}$

$\text {Table $35.1$}$
$\text {Full-Employment Output of Goods}$  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

Quizplus · Accepted Answer

According to the table, China has a comparative advantage in producing soybeans and the United States has a comparative advantage in producing computers. In order for trade to be mutually beneficial, the terms of trade should allow both countries to specialize in producing the good in which they have a comparative advantage and then trade with each other. In this case, China would specialize in producing soybeans and the United States in producing computers. The terms of trade should reflect the opportunity cost of producing one good versus the other. Since the opportunity cost of producing one computer in China is 3 tons of soybeans and in the United States it is 1/3 of a ton of soybeans, the terms of trade should be such that 1 computer will exchange for more than 1/5 of a ton of soybeans but less than 1/3 of a ton of soybeans. Therefore, the best choice is B.

Table 35.1\text {Table \(35.1\)}Table 35.1 Full-Employment Output of Goods\text {Full-Employment Output of Goods}Full-Employment Output of Goods Based on the Information in Table 35

$\text {Table \(35.1\)}$ $\text {Full-Employment Output of Goods}$ Based on the Information in Table 35