Answer: An increase in a factor of production raises the production of the good that uses that factor intensively and reduces the production of the other good. So as labor flows from Turkey to Germany, labor endowment increases in Germany. The production of labor-intensive goods relative to capital-intensive goods will increase in Germany.
11. According to the standard Heckscher-Ohlin model with two factors (capital and labor) and two goods,...
1-Home produces 2 goods X and Y . Home country has two factors of production, Labor and Capital. All consumers at Home have preferences over two goods that can be represented by the utility function U(X,) =XY . The factor requirements per unit of output of the two goods are also fixed and they are shown in the following table: Good X Good Y Labour 1/3 2/3 Capital 2/3 1/3 Home country has 360 units of Labour and 600 units...
In the traditional Heckscher-Ohlin model, the two countries differ in: Select one: O a. Technology O b. Their preferences for cloth and food. O c. Capital productivity. d. Relative abundance of production factors. Assume that two countries, Home and Foreign, are endowed with the following production factors. Countries Factor Endowments Home Foreign Labor (L) 9040 Capital (K) 30 20 Assume that food is capital-intensive and cloth is labor-intensive. Following the Heckscher-Ohlin Theory Select one: A. Foreign will export food. B....
1. The Heckscher–Ohlin model Home and Foreign have two production fac- tors, skilled and unskilled labor and produce two goods, textiles and com- puters. Home is skilled labor abundant, and computers are skilled labor intensive. Starting from a situation of autarky, the two countries liberalize trade. Assuming that the two countries produce both goods before and after trade liberalization, answer the following questions: (a) What is the effect of trade liberalization on the relative price of com- puters at Home...
The Heckscher–Ohlin model. Home and Foreign have two production factors, skilled and unskilled labor and produce two goods, textiles and computers. Home is skilled labor abundant, and computers are skilled labor intensive. Starting from a situation of autarky, the two countries liberalize trade. Assuming that the two countries produce both goods before and after trade liberalization, answer the following questions: (a) What is the effect of trade liberalization on the relative price of computers at Home and in Foreign? (b)...
We are in two good, two countries, where all of the assumptions of the Heckscher-Ohlin model of trade are satisfied. Suppose that in Japan there are 50 workers and 50 acres of land, while in the US there are 100 workers and 200 acres of land. Suppose furthermore that the two goods, rice, and cloth, are produced using land and labor. Rice is land intensive. Suppose workers in the US go on strike to protest free trade. why would they...
3. Heckscher-Ohlin theory. Assume there are two nations (1 and 2), two goods (X and Y), two factors of production (L and K). Commodity X is labor intensive, commodity Y is capital intensive. All assumptions are made following the standard H-O theory 3.1 Suppose nation 1 is L-abundant, and nation 2 is K-abundant. Please graph the production possibility frontiers of both nations. 3.2. What is the no-trade equilibrium in both nations? Please show on the graph and explain. 3.3. What...
1) We are in two good, two country, where all of the assumptions of the Heckscher-Ohlin model of trade are satisfied. Suppose that in Japan there are 50 workers and 50 acres of land, while in the US there are 100 workers and 200 acres of land. Suppose furthermore that the two goods, rice, and cloth, are produced using land and labor. Rice is land intensive. Suppose the two countries open up to trade. What will be the pattern of...
Part A. These questions help you review the Heckscher-Ohlins model. Determine whether each statement is T/F, and then briefly explain why. 32 points. 1. Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread. Bread is capital intensive, while wine is labor intensive. France is capital abundant, while Italy is labor abundant.(22 points total, 2 points each) For questions (3)-(11), consider the movement from closed-economy to free trade. (5). The capital owners in France support free trade. (6)...
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, the two countries differ in: tastes. labor productivities. relative availabilities of factors of production. all of the above