In the Heckscher-Ohlin analysis, if an relatively labor abundant country is opened to trade, then as the movement to trade takes place, the capital/labor ratio used in the country's export industry will increase and the capital/labor ratio used in the country's import-competing industry also will increase. Hence, option(B) is correct.
60. In the 2x2x2 Heckscher-Ohlin analysis, if an relatively labor-abundant country is opened to trade, then,...
59. The "magnification effect" refers to the fact that, when a country is opened to trade, a. the price of the export good rises. b. real income is magnified even though the PPF does not change. c. the price of the abundant factor rises faster than does the price of the export good. d. the price of the scarce factor rises. 60. In the 2x2x2 Heckscher-Ohlin analysis, if an relatively labor-abundant country is opened to trade, then, as the movement...
47. If relatively capital-abundant country A opens trade with relatively labor-abundant country B and the trade takes place in accordance with the Heckscher-Ohlin theorem, what would be the consequence for factor prices (w/r) in the two countries? a. (w/r) rises in A and falls in B b. (w/r) rises in A and also rises in B c. (w/r) falls in A and rises in B d. (w/r) falls in A and also falls in B 48. Which one of the...
Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country His relatively labor abundant, then once trade begins: c. wage/rent ratio rises in H wage/rent ratio falls in H wage/rent ratio remains constant in H. None of the above.
will have a production possibility In the Heckscher-Ohlin model, the country with the relative abundance of frontier that is biased toward the production of the good. Select one: O A. land; labor intensive O B. land; capital intensive C. labor; capital intensive O D. labor; labor intensive In the Heckscher-Ohlin, gains from international trade come from Select one: A. the increased wages. O B. the improvement in technology. C. the increasing on the consumption choices available to consumers. D. the...
57. In a two-country world, if country A is the relatively labor-abundant and country B is the relatively capital-abundant country by the "price" definition of factor abundance and where w is the wage rate and r is the return to capital), then . When the countries move from autarky to Heckscher-Ohlin-type trade, the result will be that a. (w/r)A < (w/r); (w/r) will rise and (w/r)e will fall b. (w/r). < (w/r); (w/r)will fall and (w/r)s will rise c. (w/r)A>...
51. The Stolper-Samuelson theorem suggests that, when a country is opened to international trade, the real income of the country's abundant factor of production will and the real income of the country's scarce factor of production a. rise; also will rise b. rise; wil fall c. fall; will rise d. fall; also will fall 52 In the "specific-factors" model where capital in each sector is fixed but labor can move freely between the two sectors, the opening of the country...
1. This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of handmade rugs and assembly line robots in Canada and India. a. Which country would you expect to be relatively labor-abundant, and which is capital-abundant? Why? b. Which industry would you expect to be relatively labor-intensive, and which is capital-intensive? Why? c. Given your answers to (a) and (b), draw production possibilities frontiers for each country. Assuming that consumer preferences are the same in...
In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade will benefit the owners of: capital the relatively abundant factor of production labor the relatively inelastic factor of production
Question 40 (2.5 points) Trade occurs because of in the availability of factor inputs across countries and the differences in the proportions of those factors that are used in producing different goods. Trade causes in the export-oriented sector and in the import-competing sector. differences; expansion; contraction similarities; expansion; contraction similarities; contraction; expansion differences; contraction; expansion Question 41 (2.5 points) Use the following information to answer question below Assume the standard trade model with two countries (Alpha and Beta), two goods...
2. Use the Heckscher-Ohlin model to consider the production of hand-made pottery and silicon microchips in the UK and India. (a) Which country would you expect to be relatively labor abundant, and which relatively capital abundant? Why? (b) Which industry would you expect to be relatively labor intensive, and which capital intensive? Why? (c) Given your answers to (a) and (b), draw PPFs for each country. Assuming preferences are the same, add indifference curves and relative autarky price lines. What...