2. (9 points) Table 2.A gives the factor prices in the U.S. and U.K., and Table 2.B gives the production requirements of commodities X and Y in the two nations. Answer the following questions. + Table 2.A (Factor Abundance) Interest rate Wage rate R/W U.S. 3% $3/hour 1 U.K. 5% $10/hour 1/2 Table 2.B U.S. U.K. Capital Labor Capital Labor Commodity X 3 Commodity Y 3 96 3 6 22 1/3 3/2 123 3 A. UK is capital-abundant and US is labor-abundant. B. In the US, X is capital-intensive and Y is labor-intensive. In the UK, intensive. Χ is capital-intensive and Y is labor- C. According to the Heckscher-Ohlin theorem, production of and export commodity X, and production of and export commodity Y. UK should specialize in US should specialize in D. According to the Stolper-Samuelson theorem, labor unions in which country will be in favor of free trade? US

2. (9 points) Table 2.A gives the factor prices in the U.S. and U.K., and Table 2.B gives the production requirements of commodities X and Y in the two nations. Answer the following questions. + Table 2.A (Factor Abundance) Interest rate Wage rate R/W U.S. 3% $3/hour 1 U.K. 5% $10/hour 1/2 Table 2.B U.S. U.K. Capital Labor Capital Labor Commodity X 3 Commodity Y 3 96 3 6 22 1/3 3/2 123 3 A. UK is capital-abundant and US is labor-abundant. B. In the US, X is capital-intensive and Y is labor-intensive. In the UK, intensive. Χ is capital-intensive and Y is labor- C. According to the Heckscher-Ohlin theorem, production of and export commodity X, and production of and export commodity Y. UK should specialize in US should specialize in D. According to the Stolper-Samuelson theorem, labor unions in which country will be in favor of free trade? US

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 5SCQ: How can there be any economic gains for a country from both importing and exporting the same good,...

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