How can a price and wage balance out?
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Widget and bracelet products. China and the United States makes each product. China makes 50,000 widgets per year and 25,000 bracelets. The United States makeses 15,000 widgets annually and 100,000 bracelets. The cost doesn’t change.
How do product and factor prices and wages eventually equalize between the two countries? Discuss the marginal transformation rate for China and U.S.? What are the terms of trade if the United States trades 3 bracelet for 10 widgets? How can China and the United States produce? Discuss labor-intensive good? Discuss the labor-abundant country? Discuss the capital-abundant country? How China and other countries be help by trade?
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