Australia is land abundant; India is labor abundant. Wheat is land intensive relative to textiles. Graphically...
Australia is land abundant; India is labor abundant. Wheat is land intensive relative to textiles. Graphically demonstrate the pre- and post-trade equilibria between these two countries. Find and label the trade triangles for each. Which factors gain and which factors lose when trade arises between these two countries? Explain carefully.
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Australia is land abundant; India is labor abundant. Wheat is
land intensive relative to textiles. Graphically...
The standard trade model. Home and Foreign have two factors of production, land and labor, with...
The standard trade model. Home and Foreign have two factors of production, land and labor, with which they produce two goods, wheat and wine. Technology is the same in the two countries. Wheat is land intensive, and Home is land abundant. Graphically analyze the effects on the terms of trade and welfare of the two countries of the following: (a) An increase in Home’s amount of land. (b) An increase in Home’s labor supply. (c) An increase in Foreign’s amount...
The standard trade model. Home and Foreign have two factors of production, land and labor, with...
The standard trade model. Home and Foreign have two factors of production, land and labor, with which they produce two goods, wheat and wine. Technology is the same in the two countries. Wheat is land intensive, and Home is land abundant. Graphically analyze the effects on the terms of trade and welfare of the two countries of the following: (a) An increase in Home’s amount of land. (b) An increase in Home’s labor supply. (c) An increase in Foreign’s amount...
A depicts production and consumption in a closed economy with labor-intensive Wheat and capital- intensive Cloth. Capital and labor are both perfectly mobile across sectors CHOS model). Read all...
A depicts production and consumption in a closed economy with labor-intensive Wheat and capital- intensive Cloth. Capital and labor are both perfectly mobile across sectors CHOS model). Read all the questions, think carefully and plan your answer before drawing Cloch Wheat (i.e. the Suppose the country opens to trade and this leads to an increase in domestic relative price of wheat rises to now equal the world relative price of wheat). a) Assume actors in the economy respond to the...
Suppose that in Australia, it takes two hours of labor to harvest 20 bushels of apples...
Suppose that in Australia, it takes two hours of labor to harvest 20 bushels of apples and three hours of labor to harvest 20 bushels of tomatoes. Further, suppose that in Brazil it takes three hours of labor to harvest 20 bushels of apples and five hours of labor to produce 20 bushels of tomatoes. I. Compute the opportunity cost per unit for each good in both countries. 2. Summarize the results in an appropriate table 3. Which of the...
Suppose there exist 2 countries, Home and Foreign; 2 goods, X and Y; and 2 factors...
Suppose there exist 2 countries, Home and Foreign; 2 goods, X and Y; and 2 factors of production, labor (L) and capital (K). Each country can produce both goods. X is labor-intensive and Y is capital-intensive. Home is labor-abundant and Foreign is capital-abundant. Assume that the standard assumptions of the Heckscher-Ohlin model hold. When answering the following question, please support each of your arguments with detailed analysis and draw the relevant diagrams to support your answer. Consider a move from...
(10 marks) Suppose there exist 2 countries, Home and Foreign; 2 goods, X and Y; and...
(10 marks) Suppose there exist 2 countries, Home and Foreign; 2 goods, X and Y; and 2 factors of production, labour (L) and capital (K). Each country can produce both goods. X is labour-intensive and Y is capital-intensive. Home is labour-abundant and Foreign is capital-abundant. Assume that the standard assumptions of the Heckscher-Ohlin model hold. When answering the following question, please support each of your arguments with detailed analysis and draw the relevant diagrams to support your answer. Consider a...
PROBLEM 1 Consider the typical HO setting: 2 countries, the United States and Canada, produce two goods,...
PROBLEM 1 Consider the typical HO setting: 2 countries, the United States and Canada, produce two goods, maiz (corn) and cloth, with two factors, land and labor. Both countries share the same tastes and the same technology. Maiz production is land intensive, and therefore cloth production is labor intensive. Furthermore, resource endowments are as follows: in the US there are 100 units of labor and 100 of land, in Canada there are 60 units of labor and 90 of land. Which...
1. The Heckscher–Ohlin model Home and Foreign have two production fac- tors, skilled and unskilled labor...
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...
1-Home produces 2 goods X and Y . Home country has two factors of production, Labor...
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...
2. This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production...
2. 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 rela- tively labor-abundant, and which is capital- abundant? Why? b. Which industry would you expect to be rel- atively labor-intensive, and which is capital- intensive? Why? c. Given your answers to (a) and (b), draw production possibilities frontiers for each country. Assurning that consumer preferences...
A depicts production and consumption in a closed economy with labor-intensive Wheat and capital- intensive Cloth. Capital and labor are both perfectly mobile across sectors CHOS model). Read all the questions, think carefully and plan your answer before drawing Cloch Wheat (i.e. the Suppose the country opens to trade and this leads to an increase in domestic relative price of wheat rises to now equal the world relative price of wheat). a) Assume actors in the economy respond to the...
Suppose that in Australia, it takes two hours of labor to harvest 20 bushels of apples and three hours of labor to harvest 20 bushels of tomatoes. Further, suppose that in Brazil it takes three hours of labor to harvest 20 bushels of apples and five hours of labor to produce 20 bushels of tomatoes. I. Compute the opportunity cost per unit for each good in both countries. 2. Summarize the results in an appropriate table 3. Which of the...
2. 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 rela- tively labor-abundant, and which is capital- abundant? Why? b. Which industry would you expect to be rel- atively labor-intensive, and which is capital- intensive? Why? c. Given your answers to (a) and (b), draw production possibilities frontiers for each country. Assurning that consumer preferences...
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