**Question 14**Leontief was trying to test the Heckscher–Ohlin Model. He assumed that the US was capital abundant and his results:- ☐ he did not come up with any results as he did not have data on the factor content of imports.- ☐ agreed with the model; he found that US exports were relatively more capital intensive than its imports.- ☐ agreed with the model; he found that US imports were relatively less capital intensive than its imports.- ☐ contradicted the model; he found that US exports were relatively less capital intensive than its imports.

Leontief paradox: In economics, Leontief's paradox states that the capital/labor ratio in exports is…

Answered: Question 14 Leontief was trying to test…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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There are two countries in the world economy: Home and Foreign. Home has 3000 units of labor available. It can produce two goods, coffee (C) and sugar (S). The unit labor requirement in coffee production at home, aLc, is 4, while the unit labor requirement in sugar production, aLs, is 10. Foreign has a labor force of 1600. Foreign’s unit requirement in coffee production, a*Lc, is 10, while the unit labor requirement in sugar production, a*Ls, is 2. Graph the production possibility frontier for both Home and Foreign. Use C in the vertical axis. What is the opportunity cost of coffee in terms of sugar in both Home and Foreign? Using the information (numbers) provided above, construct the world relative supply curve. Label it RS. The horizontal axis must show the world quantity of coffee relative to the world quantity of sugar, i.e., (Qc+Q*c)/(Qs+Q*s). The vertical axis must show the relative price of coffee with respect to the price of…
.(Ricardian Model) In class we worked through the trade example where Home had a comparative advantage in cheese (alc /alw < alc* /alw*). The result was that world price ratio was between the autarky price ratios of the two countries. We showed for the Home country that the opening of trade resulted in the workers’ real wage in terms of cheese remaining the same while the real wage in terms of wine increased. (There is no need to use diagrams to answer the questions below.) (a) With the opening of trade what will the nominal wage W* be in the Foreign country? (You will not be able to find a numerical value here.) Briefly explain. (b) What will happen with the opening of trade to the Foreign country’s real wage in terms of cheese and wine? Briefly explain.
V2
Assume that countries A and B operating in the immobile factor model have identical labor endowments. Both produce beer and pizzas. Country A has an absolute advantage in the production of beer, while Country B has an absolute advantage in the production of pizzas. Which of the following statements will be true? O Labor productivity of beer workers is higher in Country B. O Unit labor requirement for pizza production is lower in Country A. O Autarky price of beer will be higher in Country B. O Autarky price of pizza will be higher in Country B. O Country B produces more beer than Country A.
One way in which the Heckscher-Ohlin model differs from the Ricardian model of comparative advantage is by assuming that ...............is/are identical in all countries. O a. factor intensities O b. scale of production O c. opportunity costs O d. factor endowments O e. technology QUES Not J Mark Fla
Please no written by hand solution
When countries specialize in the production of goods they have the comparative advantage in, both and will increase O prices, the trade deficit O production, consumption price level, unemployment consumption, unemployment
Question 17 With what countries do advanced industrial countries primarily trade? O less developed countries O newly industrializing countries O underdevcloped countries O their former colonies O other advanced industrial countries
Is it possible to find equilibrium prices in a linear exchange model for six countries whose directed graph looks like the one below, and why? The arrows have the usual meaning, for example, the arrow from A to B means that country A is selling its product to country B. A BA C- D F E a. No, because it is not possible to go from C to F following the arrows. O b. Yes, because it is possible to go from any country to any other country following the arrows. Oc. Yes, as long as the countries' governments are conservative. Od. Yes, as long as inflation is low. O e. No, because equilibrium prices never exist.
Using the specific factors theory and the following table on relative factor abundance, what is the predicted impact of China's accession to the WTO 1999 on its trade with the US (i.e. which type of goods will be traded and in which direction)? Please explain (no computations needed) your answer and give examples on no more than three paragraphs. High- Physical Skilled Medium- Skilled Unskilled Arable Forest Capital | Labour Labour Labour Land Land USA 26 30 8 1 17 9 China 5 12 31 25 14 6 Table 1: Share in percent of country's factor endowment of world factor endowments, early 2000s, rough approximation.
Consider the Heckscher-Ohlin-Samuelson model for the US producing 2 goods (digital cameras and baskets) using 2 factors (capital and labor). Let the production of digital cameras be relatively capital-intensive. If foreign owners of domestic capital decide to decrease their investment in the US, how would that affect the output in each industry?
Suppose we are considering a HO model setting, where countries have not yet opened up to trade. Two goods are produced exclusively by domestic labor supplies, tires and vehicle frames. Suppose a tire is labor-intensive in production whereas constructing vehicle frames is a capital intensive task that more frequently features automated machinery. Home and foreign maintain the following capital (K) and labor (L) endowments. Factor L K Home 1120 575 Foreign 1680 950 Suppose these countries transition into a free trade scenario. Using the previous details about both countries, perform the following tasks. (i) Sketch a world relative price, CPC line, through your bundle such that it passes through the PPF (it will have no tangency to PPF). (ii) Using this CPC line, with its fixed slope, shift the line until it is perfectly tangent with the indifference curve. Update your sketch with this newly labeled CPC. (iii) Correctly label the equilibria points at which Home consumes and produces. (iv)…

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