One July, the United States sold aircraft worth \(\$ 1\) billion to China and bought aircraft worth only \(\$ 19,000\) from China. During the same month, however, the United States bought \(\$ 83\) million worth of men's trousers, slacks, and jeans from China but sold only \(\$ 8,000\) worth of trousers, slacks, and jeans to China. Using what you have learned about how trade is determined by comparative advantage, answer the following questions. a. Which country has the comparative advantage in aircraft production? In production of trousers, slacks, and jeans? b. Can you determine which country has the absolute advantage in aircraft production? In production of trousers, slacks, and jeans?

In July, the United States sold aircraft worth \(1\) billion to China, while China sold aircraft worth only \(19,000\) to the United States. This trade pattern suggests that the United States has a comparative advantage in aircraft production.

In the same month, the United States bought \(\$ 83\) million worth of men's trousers, slacks, and jeans from China, while China bought just \(\$ 8,000\) worth of these products from the United States. This trade pattern indicates that China has a comparative advantage in trousers, slacks, and jeans production. #b. Absolute advantage in aircraft production and trousers production# To determine absolute advantage, we would need information about the production capabilities of the two countries when using the same resources. Since the exercise does not provide such information, we cannot directly determine absolute advantage. However, based on the trade patterns, we can infer that the United States has an absolute advantage in aircraft production, as they sold dramatically higher quantities of aircraft to China than they imported. Similarly, we can infer that China has an absolute advantage in trousers, slacks, and jeans production because of the significant difference in the quantities traded.