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The Heckscher-Ohlin model predicts that there will be no factor intensity reversals when moving from autarky to trade.
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- We need to use implicit differentiation to derive comparative statics results in the case where: There are multiple exogenous shocks to the market at once. The demand and supply functions are linear. We are studying a dynamic process of adjustment. We do not have an exact solution for equilibrium prices in closed form. O More than one of the above. No answer.Suppose China can produce two goods, cloth and food and has three factors of production labor (L), capital (K) and Land (T for terrain). Food is produced using land and labor while cloth is produced using capital and labor, hence, labor is a mobile factor. Keeping in mind the Specific Factors Model, answer the following questions a) What are the production functions for cloth and food? b) Write down the wage equations for each sector and the slope of the production possibility frontier. c) Drive the production possibility frontier for China [hint 4 quarter diagram]Consider the Heckscher-Ohlin Model. Suppose there are two countries, Home and Foreign, two goods, Good A and Good B, and two factor inputs capital and labor. Suppose Home is more labor abundant than the Foreign and Good A is more capital intensive than Good B. (c) Draw a figure showing the relationship between relative demand and relative supply of Good A versus Good B in the Home country and the Foreign. Denote the relative supply curve as RS at Home and RS* in the Foreign, and the relative demand curve as RD.
- The specific factors model and the Heckscher- Ohlin model are both suitable to analyze winners and losers from trade. b1) What is the main difference between both models with respect to the time horizon? b2) What is the main difference between both models with respect to the factor mobility?Consider a tropical island economy with only two sectors: souvenir manufacturing and hospitality (hotels). Both sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the product demand curve in either sector. Suppose a union forms in the souvenir manufacturing industry. The union limits its membership to less than the number of workers employed before the union formed and forces all employers in the industry to hire only union workers. Show the effect of unionization in the souvenir industry on the labor market for souvenir manufacturers. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. WAGE RATE (Dollars per hour] 12+ 10 8 6 2 0 10 20 30 Labor Supply Labor Demand 40 50 60…Recent work suggests that the efficiency of factors of production seems to differ inter- nationally. Explain how this would affect the concept of factor-price equalization in the Heckscher-Ohlin model.
- Consider the supply chain involved when a customer purchase from Samsung website. Identify the push/pull boundary and two processes each in the push and pull phases.?For a competitive equilibrium in a two-period model, must the government's present-value budget constraint hold?The following are correct statements about the Labor Market model, EXCEPT: Question 14 options: The Demand for labor is mainly determined by the Marginal Productivity of Workers. The Supply of Labor is mainly determined by the Opportunity Cost for Work. An increase in Labor Productivity will likely lead to higher wages but less total labor demand. In equilibrium, the market for labor will attain zero unemployment.
- a) What are some of the main assumptions behind the H-O (Heckscher-Ohlin) model. b) What is/are the assumption(s) of the H-O model in regards to demand? How does (do) this (these) deviate from the Classical School assumptions? c) Examine the Stolper-Samuelson Theorem in conjunction with the H-O model and the factors of production.In the Heckscher-Ohlin model, modelling supply chains A is impossible. B can invalidate the factor price equalisation result. C allows countries to specialise in producing different intermediate goods D will imply that wages for skilled labour move in opposite directions in countries with relative abundance of skilled labour and countries with relative scarcity of skilled labour.In both the Ricardian and Heckscher-Ohlin models, the relative price of a good in autarky must always be equal to: O that good's opportunity cost O the free trade relative price of that good O that good's unit labor requirement: O the other good's unit labor requirement