Homework Answers
When we see labor is assumed to have mobility then the country in trade which offers maximum wages shall have highest inflow of labor and as results skilled labor moves into country with higher wage ratios.
This decreases the overall productivity as in domestic country firms shall increase wages to attract labor and hence the earnings of landowners shall decrease. Higher earnings correspond for higher productivity and hence comparative advantage also comes up. This in turn reduces trade deficit with the corresponding country and hence leads to trade surplus.
The below graph depicts firm specific or land owner specific Human Capital Investment. The workers share of benefit is higher when workers share of cost is higher. In other terms when firms invest and pay commensurately the benefits are higher for both of them.
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20 Doints) Assume that in a capital abundant country, there are three factors of production, r...
57. In a two-country world, if country A is the relatively labor-abundant and country B is the relatively capital-a...
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>...
47. If relatively capital-abundant country A opens trade with relatively labor-abundant country B and the trade...
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...
2. Suppose country X produces two goods- computer (capital intensive) and shoes (labor intensive). The diagram...
2. Suppose country X produces two goods- computer (capital intensive) and shoes (labor intensive). The diagram shows country X's PPF and the change of production point from A to B when country X starts trading with country Y. If country X is abundant in capital and Y is abundant in labor. a. Label the two axes in the diagram. b. Then draw: - the relative price lines before and after trade, - two indifference curves that maximize utility before and...
2. (a) Suppose that the government in country A cuts down a large part of the...
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will have a production possibility In the Heckscher-Ohlin model, the country with the relative abundance of...
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...
61 Suppose that we are in a two-factor, two-country world where the factors of production are...
61 Suppose that we are in a two-factor, two-country world where the factors of production are labor (L) and land (T), the returns to the factors are the wage rate (w) and the rental rate on land (t), and the countries are country A and country B. In this situation, country A is land-abundant relative to country B by the physical definition of relative factor abundance if price (or economic) definition if _, and country A is land-abundant relative to...
MULTIPLE CHOICE A country whose ratio of capital to other factors of production is greater than...
MULTIPLE CHOICE A country whose ratio of capital to other factors of production is greater than the rest of the world’s ratio of capital to other factors of production is: Relatively capital-intensive. Relatively capital-abundant. Running a trade deficit. Operating at a point inside its production possibilities curve. Please explain. Thank you!
3. (8 points) Consider a small open economy in the Specific-Factors model with 2 goods (C and F) ...
True or False, only answer part c is fine
3. (8 points) Consider a small open economy in the Specific-Factors model with 2 goods (C and F) and three factors (mobile labor, fixed capital in C, and fixed land in F). Except otherwise noted, assume that every factor has the same preferences for C and F. Under free trade, the economy exports F. (a) As the home country opens up from autarky to trade, the opportunity cost of F in...
Consider two countries, Spain and Italy, where the only two factors of production are capital and...
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Suppose Elmira is a small country that produces two goods, grain and novels, with two factors...
Suppose Elmira is a small country that produces two goods, grain and novels, with two factors of production, unskilled labor (L) and skilled labor (L). Both factors are completely mobile between the two sectors of production in the long run. In the medium run, skilled labo is specific to its sector. That is, it takes time to retrain and acquire new skills in order to move between the two sectors in the economy The production of grain is relatively intensive...
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>...
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...
2. Suppose country X produces two goods- computer (capital intensive) and shoes (labor intensive). The diagram shows country X's PPF and the change of production point from A to B when country X starts trading with country Y. If country X is abundant in capital and Y is abundant in labor. a. Label the two axes in the diagram. b. Then draw: - the relative price lines before and after trade, - two indifference curves that maximize utility before and...
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...
61 Suppose that we are in a two-factor, two-country world where the factors of production are labor (L) and land (T), the returns to the factors are the wage rate (w) and the rental rate on land (t), and the countries are country A and country B. In this situation, country A is land-abundant relative to country B by the physical definition of relative factor abundance if price (or economic) definition if _, and country A is land-abundant relative to...
True or False, only answer part c is fine
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Suppose Elmira is a small country that produces two goods, grain and novels, with two factors of production, unskilled labor (L) and skilled labor (L). Both factors are completely mobile between the two sectors of production in the long run. In the medium run, skilled labo is specific to its sector. That is, it takes time to retrain and acquire new skills in order to move between the two sectors in the economy The production of grain is relatively intensive...
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