The following hypothetical production possibilities tables are for china and the united states. assume that before specialization and trade the optimal product mix for china is alternative b and for the united states is alternative u.
china production possibilities
product a b c d e f
apparel 30,000 24,000 18,000 12,000 6,000 0
chemicals (in tons) 0 6 12 18 24 30
u. s. production possibilities
product r s t u v w
apparel 10,000 8,000 6,000 4, 2,000 0
chemicals (in tons) 0 4 8 12 16 20
instructions: enter your answers as whole numbers.
(a) are comparative-cost conditions such that the two countries should specialize?
if so, what product should each produce?
(b) what is the total gain in apparel and chemical output that would result from such specialization?
apparel: units.
chemicals: tons.
(c) what are the limits of the terms of trade?
units of apparel for 1 ton of chemicals and units of apparel for 2 tons of chemicals.
(d) suppose that the actual terms of trade are 1 unit of apparel for 1½ units of chemicals and that 4,000 units of apparel are exchanged for 6 units of chemicals. what are the gains from specialization and trade for each nation?
the united states or china has a gain of units of apparel.
the united states or china has a gain of tons of chemicals.

In december of 2004, the company you own entered into a 20-year contract with a grain supplier for daily deliveries of grain to its hot dog bun manufacturing facility. the contract called for "10,000 pounds of grain" to be delivered to the facility at the price of $100,000 per day. until february 2017, the supplier provided processed grain which could easily be used in your manufacturing process. however, no longer wanting to absorb the cost of having the grain processed, the supplier began delivering whole grain. the supplier is arguing that the contract does not specify the type of grain that would be supplied and that it has not breached the contract. your company is arguing that the supplier has an onsite processing plant and processed grain was implicit to the terms of the contract. over the remaining term of the contract, reshipping and having the grain processed would cost your company approximately $10,000,000, opposed to a cost of around $1,000,000 to the supplier. after speaking with in-house counsel, it was estimated that litigation would cost the company several million dollars and last for years. weighing the costs of litigation, along with possible ambiguity in the contract, what are three options you could take to resolve the dispute? which would be the best option for your business and why?