Question

Suppose a country, whose production and consumption of cell phones is large relative to the world market, has just entered the global market. If the country is a net-importer of cell phones, we would expect the world:

Multiple Choice

• demand curve to shift more to the left than the world supply curve as a result.

• supply curve to shift more to the left than the world demand curve as a result.

• supply curve to shift more to the right than the world demand curve as a result.

• demand curve to shift more to the right than the world supply curve as a result.

In terms of factor endowments, developed countries such as the United States tend to be relatively abundant in capital and relatively scarce in labor. Opening these economies to trade is likely to cause which of the following?

• Wages will decrease, and the return on capital will decrease.

• Wages will increase, and the return on capital will decrease.

• Wages will decrease, and the return on capital will increase.

• Wages will increase, and the return on capital will increase.

Answer 1

As per the Chegg rules, we are allowed to solve at max 1 question if more than 1 are asked, or else we will be revoked

Question 1

Since the country is a net importer, it implies that on adding it to the international market, demand will increase more as compared to the supply. Hence, there will be more right shift in demand and comparatively less rightward shift in supply. Fourth Option is correct.