Assume a Heckscher-Ohlin model. Home and Foreign produce food (F) and machinery (M) using labor (L) and capital (K) as the unique inputs in both sectors. Both countries face the same technologies. In both countries the input requirements are fixed at akF = 2, aLF = 1, akm = 2, and aLM = 3 (i.e., 3 units of labor are required to produce one unit of machinery etc.). Home is endowed with K = 800 units of capital-hours and L= 600 units of labor-hours. Foreign is endowed with K* = 600 units of capital-hours and L* = 400 units of labor-hours. The output of food is denoted by QF. The output of machinery is denoted by Qm- a) Determine Home's capital constraint. Home's capital constraint is b) Which of the two goods is capital-intensive in the production? is capital-intensive. c) Which output mix will be realized in Home if it uses all its resources? The optimal output mix is units of food and units of machinery. d) Which good will be exported by Home? Home will export

Assume a Heckscher-Ohlin model. Home and Foreign produce food (F) and machinery (M) using labor (L) and capital (K) as the unique inputs in both sectors. Both countries face the same technologies. In both countries the input requirements are fixed at akF = 2, aLF = 1, akm = 2, and aLM = 3 (i.e., 3 units of labor are required to produce one unit of machinery etc.). Home is endowed with K = 800 units of capital-hours and L= 600 units of labor-hours. Foreign is endowed with K* = 600 units of capital-hours and L* = 400 units of labor-hours. The output of food is denoted by QF. The output of machinery is denoted by Qm- a) Determine Home's capital constraint. Home's capital constraint is b) Which of the two goods is capital-intensive in the production? is capital-intensive. c) Which output mix will be realized in Home if it uses all its resources? The optimal output mix is units of food and units of machinery. d) Which good will be exported by Home? Home will export

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Confirm that the Cobb-Douglas production function satisfies all the three properties: more is better, concavity, and CRS.
Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cars (c) and pharmaceutical drugs (d), and three factors, capital K, skilled labour S, and unskilled labour L. The production functions are given by 1 1 F.(Ke, Le) = K. Lễ and Fa(Ka, Sa) = K}S}. That is, skilled labour is specific to pharmaceutical drugs, and unskilled labour to cars. Suppose that the countries' factor endowments are KH = 2 = KF, 1 and SF LH and LF 3/2, and SH 1/2, so that the total labour force is 2 in %3D both countries. The price of capital is denoted by r, the price of skilled and unskilled labour by ws and Wi. Denote the goods' prices by pc and pa, and normalise pd = 1 for simplicity. The demand for cars and drugs in country j = H, F is given by x and r: 2Yi and x 3 på 3 p where Yi denotes aggregate income in country j. (f) Suppose that now that Foreign has a production technology FF (Ke, S.) = 2K Lề and Ff(La, Sa) = 2K S. %3| Describe the effect of free trade in goods but…
Suppose the per-worker production function is glven as follow. y= 6kh2/a, where k- (physical) capital per worker, h human capital per worker The economy is initially endowed with 280 units of (physical capital per worker and 250 units of human capital per worker. In the neighbourhood of the initial endowments of both physical and human capital, what will be the change in per-worker output when there is a small incremental change in human capital while holding all else constant lie, what is the marginal product of human capital)? Note: Keep your answer to 2 decimal places if needed. For example, if your answer is 1234.56. then enter 1234.56 in the answer box.
Which of the following properties characterize the Heckscher-Ohlin Model? Check all that do. The law of diminishing returns Identical technologies across countries Perfect Competition Perfect mobility of factors between industries Constant returns to scale Factor Price Equalization O Factor intensity reversals O Perfect mobility of factors between countries O Identical technologies across industries O Factor Complementarity
Suppose the input combination currently used by a producer is such that the TRS is equal (in absolute value) to the ratio of the input prices. Then, we can conclude that the producer is maximizing her profits. Group of answer choices True False
In the Faustmann model, what factors determine the marginal benefits and marginal costs of allowing a stand of trees to continue to grow for another year, and therefore the dynamically efficient harvest interval?
How did the lauch of Apple's ipad effect the competitive market environment? High prices and high profits in a competitive generally lead to new suppliers entering the market, prices sliding down the market demand curve, the market supply curve shifting to the right, and significant product and technological innovation.
Suppose an economy uses only two inputs in production: capital and labour. The following table describes a production function, where y stands for output per worker and k is capital per worker.Suppose there are two countries, A and B. The economies of the two countries can be described by this production function. If Country A has initially a capital–labour ratio k = 0.167 and Country B has k = 0.412, show that an equal increase in capital produces more extra output in country A than in Country B. Explain with words (computations) + graph y k 0.000 0.000 0.173 0.030 0.302 0.091 0.408 0.167 0.480 0.231 0.535 0.286 0.577 0.333 0.612 0.375 0.642 0.412 0.667 0.444 0.688 0.474 0.707 0.500 0.724 0.524 0.739 0.545
Kwami and Adzga quit their jobs and decided to start a piggery joint venture business. The company processes and packs pork for sale. The output from this firm is described by the Cobb-Douglas production function, q=K¹/² A¹/2 Where q is the number of pigs processed in a quarter, K is the number of hours invested by Kwami in a quarter, and A is the number of hours invested by Adzoa in a quarter. Kwami and Adzoa value 1 hour of their time at $12 and $3 respectively based on what each was earning before quitting their jobs. a) Obtain the number of hours that Adzoa needs to invest (as a function of q and K) for 150 pigs to be processed in a quarter b) How many hours should Adzoa invest for 150 pigs to be processed in a quarter if it is known that Kwami invested 750 hours? c) The cost function for this company may be written as, C= vK + WA where v and w are unit costs for Kwami and Adzoa. wwwwwwww www Substituting for v and w gives C= 12K + 3A Express this cost of production function as a…
Please don't copy
All of these statements about the production function are true EXCEPT a) the curve features 3 distinct regions: increasing returns to scale, constant returns to scale, and diminishing returns to scale. b)the curve's shape matches and its description of the interaction between the graph's axes represents the law of diminishing returns c) it can be applied to many economic markets d) one variation is used to show the difference between firm and market specific risk
The biological relationship between the growth for the fish population and the size of the fish population is g = 12S(1 - S/4) where g is the growth of the fish population and S is the size of the population. The size of the harvest is a function of the amount of human effort expended b = 3ES where E is the level of effort. Market price of fish per unit is $100 and a constant marginal cost of effort is $40. We can derive the free-access equilibrium effort level Ef by setting the net benefits function equal to zero. Then, E f = in one decimal place. Hint: Write the number