The specific factor model was developed by Samuelson and Jones. In this model, capital and land are specific factors while labour is a mobile factor. Please see the handwritten answers of the given question attached in the images below -
2. Specifie-factors model Suppose that land is specific to com, capital is specific to automobiles, labor is mobile...
Specinic-Tactors model-part 2 Suppose that land is specific to corn, capital is specific to automobiles, laboris mobile between sectors, and payments are as follows: Automobiles: Sales revenue = 200; Payments to labor = 100; Payments to capital = 100 Corn: Sales revenue = 200; Payments to labor = 40; Payments to land = 160 Suppose price of corn increases by 20%, the price of automobiles increases by 10%. and the wage increases by 15%. DN Calculate the Nominal Percentage change...
Suppose that land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors. If there is an increase in the amount of capital, holding the prices of agricultural and manufacturing goods constant, what happens to the equilibrium nominal wage rate and labor allocation? What happens to the rental rate of capital? What happens to the rental rate of land?
In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of the manufactured good will cause: A) a decrease in nominal wages in both the agricultural and manufacturing sectors. B) an increase in real wages in both the agricultural and manufacturing sectors. C) an increase in both nominal and real wages in both the agricultural and manufacturing sectors. D) an increase in nominal wages in both the agricultural and manufacturing sectors. Which statement below is correct? A)...
Part II. The Specific-Factors Model 1. Assume under the Specific-Factors Model, home country export manufacturing goods to foreign country. Use the following information to answer the questions below: Manufacturing: Sales revenue Pm x Qm = 150 Payments to labor = W x Lm = 100 Payments to capital = Rkx K = 50 Sales revenue Pax Qa 150 Payments to labor W x La 50 Agriculture: Rt x T 100 Payments to land Holding the price of agriculture constant, suppose...
Chile and the United States use capital and labor to produce wheat and automobiles. Wheat production is more labor intensive than automobile production. Chile has 200 units of capital and S0 units of labor and United States has 1500 units of capital and 275 units of labor. has more capital and is relatively capital abundant. will export wheat and d. In Chile, the production of e In United States, the price of automobiles Chilean workers should has more labor. is...
Consider a 2x3 specific-factors model, with all associated assumptions, where HOME is a small country and has two sectors, (1) light manufactured goods and (2) industrial goods, and three factors, (i) capital (which is mobile between sectors), (ii) unskilled labor (which is specific to light manufactures) and (iii) skilled labor (which is specific to industrial goods). (a) If the unskilled laborers express a strong preference against free trade, what does this suggest about HOME’s comparative advantage? Explain. (b) If, as...
uestion 2: (Total Points: 10 Suppose England uses land, capital, and labor to produce alfalfa and sweaters. Land is specific to the production of alfalfa, capital is specific to the production of sweaters, and labor is a mobile factor used in both industries. Suppose that with no international trade, the England is S3 per bushel. The graph below shows England's production possibility frontier (PPF) and indifference curves (U1, U2, U3). price of alfalfa in SWEATERS (Millions] 140 120 100 PF...
1 (15 points). Consider a 2x3 specific-factors model, with al l associated assumptions, where Home is a small country and has two sectors, (G) light manufactur is specific to light manufacturers) and (ii) skilled labor (which is specific to (a) If the unskilled laborers actors, () capital (which is mobile between sectors), () unskilled labor (which industrial goods). express a strong preference against free trade, what does this suggest about Home's comparative advantage? Explain. (b) If, as a result what...
In the specific factors model, assume that the price of agricultural (land-using, i.e., good 2) good decreases exogenously while the price of manufactured (capital-using, i.e., good 1) good is unchanged. Arrange the following terms in order of their magnitude: - change in rental rate of land - change in rental rate of capital - change in price of good 1 - change in price of good 2 - change in wage
Heckscher-Ohlin model Country A produces cellphone (C) and food (F) with capital and labor. Both sectors are perfect competitive. Capital (K) and labor (L) are not substitutable with each other. Thus, unit capital requirement and unit labor requirement are fixed. ??? = 3, ??? = 1, ??? = 2, ??? = 4, where ??? is the number of units of K-capital required to produce and unit of C-cellphone. a. Which sector is relatively capital intensive? Which sector is relatively labor...