Homework Answers
A capital intensive good is a good which requires a higher capital labor ratio in its production.
Clearly, for one unit of cloth, 1/100 unit of capital and 1 unit of labor is required. So, the ratio is 1/100.
Clearly, for one unit of food, 1/200 unit of capital and 1/0.5 unit of labor is required. So, the ratio is (1/200)/(1/0.5)=1/400.
So, cloth is more capital-intensive
The correct option is C.
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This question refers only to the Hecksher-Ohlin model. The home country has one unit of capital...
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Problem 1
A country (”Home”) is populated with 300 workers who produce
either food (F) and/or clothing (C). Each food worker produces 6
units of food and each clothing worker produces 3 units of
clothing. The preferences of the consumers over food and clothing
are represented by the utility function: u(DF ,
DC) = (DF ) 2/3 (DC)
1/3
1) Assuming that at the optimum, consumers set their marginal
rate of substitution, MRSDF ,DC , to the relative price,
i.e.,...
will have a production possibility In the Heckscher-Ohlin model, the country with the relative abundance of...
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Problem 1
A country (”Home”) is populated with 300 workers who produce
either food (F) and/or clothing (C). Each food worker produces 6
units of food and each clothing worker produces 3 units of
clothing. The preferences of the consumers over food and clothing
are represented by the utility function: u(DF ,
DC) = (DF ) 2/3 (DC)
1/3
1) Assuming that at the optimum, consumers set their marginal
rate of substitution, MRSDF ,DC , to the relative price,
i.e.,...
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...
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