In the specific factor model, suppose that Nation 1 and Nation 2 have identical labor endowments, and identical capital in production of good Y, but nation 1 has more capital in the production of good 1. Technologies and tastes are the same across both nations. Can we predicts the trade pattern between countries? What factors(s) in Nation 1 benefits from the opening of trade, and which factor(s) loses?

In the specific factor model, suppose that Nation 1 and Nation 2 have identical labor endowments, and identical capital in production of good Y, but nation 1 has more capital in the production of good 1. Technologies and tastes are the same across both nations. Can we predicts the trade pattern between countries? What factors(s) in Nation 1 benefits from the opening of trade, and which factor(s) loses?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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