The Heckscher-Ohlin theorem predicts that when a capital-abundant country opens to trade O Capital owners and workers will be better off This country will import labor-intensive good The real wage in this country will increase O Relative factor prices will not change

The Heckscher-Ohlin theorem predicts that when a capital-abundant country opens to trade O Capital owners and workers will be better off This country will import labor-intensive good The real wage in this country will increase O Relative factor prices will not change

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The Heckscher-Ohlin theorem predicts that when a capital-abundant country opens to trade
Capital owners and workers will be better off
This country will import labor-intensive good
The real wage in this country will increase
Relative factor prices will not change

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In che mid-1980s several of South Africa's maintrading partners imposed trade sanctions on SouthAfrica in an effort to bring an end to the then-prevailing policy of apartheid.South Africa mainly relied on the exports ofprimary commodities like gold, iron and other preciousmetals, while importing mainly capital goods.This almost instantly led to South Africa expe-riencing a shortage of capital goods, resulting insubdued economic growth. 31. In what did South Africa have a comparativeadvantage? 32.a.Draw a graph to illustrate production,consumption and trade in South Africabefore the imposition of trade sanctions.b.Was South Africa consuming inside, on oroutside its PPP? Explian your answer.c.Draw a graph to show the effects of tradesanctions on consumption and productionin South Africa.d. Did trade sanctrions change any opportunitycoSts in South Africa? If so, did theopportunity cost of everything increase?Did the opportunity cost of any itemsdecrease? Illustrate your answer…
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Consider a two country, two goods, single factor model with Öxed labor requirements. If a country A has an absolute advantage in both goods over country B, there cannot be a international trade between them. 1. true 2. false
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When Americans start exporting more, in the short run we tend to see the price level and equilibrium output O fall; fall O rise; fall O rise; rise Ofall: rise
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2) Assume that Mexico has a higher labor-to-capital ratio than the United States, leaving the United States mostly endowed with capital relative to Mexico. Assume also that clothing is labor-intensive in production relative to autos. a. Use the factor endowment theory framework to label the two transformation schedules below, indicating which one represents Mexico and which one the United States. Qeioting Relothing Qauios autos b. Assuming similar tastes or preferences as reflected in the two indifference curves shown in part a, draw the pre-trade price line for each country. Which one is steeper? What does this mean? In which country are autos relatively more expensive? 3.