The country of Autarkistan is currently closed off from the world and engages in no international trade. Like the rest of the world, it produces and consumes (only) two goods, textiles and machines, using labor and capital. The textile industry employs more labor, per unit of capital, than does the machine industry. Being poor, Autarkistan has far less capital per worker than does the rest of the world. Now suppose that Autarkistan opens up to free international trade with the world. Using the H-O model, what will happen to employment of labor in the machine industry in Autarkistan? Group of answer choices Rise Not Change Cannot tell. Fall
The country of Autarkistan is currently closed off from the world and engages in no international trade. Like the rest of the world, it produces and consumes (only) two goods, textiles and machines, using labor and capital. The textile industry employs more labor, per unit of capital, than does the machine industry. Being poor, Autarkistan has far less capital per worker than does the rest of the world. Now suppose that Autarkistan opens up to free international trade with the world. Using the H-O model, what will happen to employment of labor in the machine industry in Autarkistan? Group of answer choices Rise Not Change Cannot tell. Fall
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The country of Autarkistan is currently closed off from the world and engages in no international trade. Like the rest of the world, it produces and consumes (only) two goods, textiles and machines, using labor and capital. The textile industry employs more labor, per unit of capital, than does the machine industry. Being poor, Autarkistan has far less capital per worker than does the rest of the world.
Now suppose that Autarkistan opens up to free international trade with the world. Using the H-O model, what will happen to employment of labor in the machine industry in Autarkistan?
Group of answer choices
Rise
Not Change
Cannot tell.
Fall
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