In the context of the Heckscher-Ohlin model with the two production factors capital and labor, we have discussed that industries differ in their labor and capital-intensities. (a) Define labor and capital-intensity of an industry. (b) Explain what we mean when we assume that there are no factor intensity reversals. Illustrate the case of a factor intensity reversal using a suitable diagram. (c) Human activity, particularly the production and consumption of energy-intensive goods and the associated emissions of carbon dioxide into the atmosphere, is a major factor driving global warming. Therefore, the European Union will introduce a carbon border adjustment mechanism (CBAM) in the near future. Imagine a variant of the Heckscher-Ohlin model with two production factors labor and energy used in two industries. Define labor and energy intensity of industry in such a model. Can you think of examples of an energy-intensive industry versus a labor-intensive industry?
In the context of the Heckscher-Ohlin model with the two production factors capital and
labor, we have discussed that industries differ in their labor and capital-intensities.
(a) Define labor and capital-intensity of an industry.
(b) Explain what we mean when we assume that there are no factor intensity reversals.
Illustrate the case of a factor intensity reversal using a suitable diagram.
(c) Human activity, particularly the production and consumption of energy-intensive goods and the associated emissions of carbon dioxide into the atmosphere, is a major factor driving global warming. Therefore, the European Union will introduce a carbon border adjustment mechanism (CBAM) in the near future. Imagine a variant of the Heckscher-Ohlin model with two production factors labor and energy used in two industries. Define labor and energy intensity of industry in such a model. Can you think of examples of an energy-intensive industry versus a labor-intensive industry?
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