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?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter28: International Trade

Section: Chapter Questions

Problem 8P

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