Suppose there are two nations (A and B) which have the same technology, identical tastes but...
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...
Given the following economies: Countries A and B have two factors of production- labour and capital, which have some degree of substitutability. Country A is relatively capital-abundant. They each have the ability to produce two goods- X and Y. Production of X is relatively capital-intensive. Technology and tastes are identical in countries A and B. Consider the following four cases. I. An increase in A’s capital stock II. An increase in A’s labour supply III. An increase in B’s capital...
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. Given the information in Table 1, in a two country and two-product Ricardian model, which of the following statements is (are) true? Table 1 Unit Labour Requirements T-shirt Brandy 4 hours 12 hours 6 hours 12 hours United States France A) The pretrade price ratio in France is 1 brandy - 2 T-shirts. B) The US pretrade price ratio is 1 brandy - 4 T-shirts. C) The US pretrade price ratio is 1 T-shirt = 1/3 brandy. D) The...
Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between international trade and domestic trade More complex context More difficult and risky Higher management skills required 3. Basic concept s relating to international trade Visible trade & invisible trade Favorable trade & unfavorable trade General trade system & special trade system Volume of international trade & quantum of international trade Commodity composition of international trade Geographical composition of international trade Degree / ratio of...
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Budgetary Policy and Economic Growth Errol D'Souza The share of capital expenditures in government expenditures has been slipping and the tax reforms have not yet improved the income...