Assume that there are two factors of production:land and labor. According to the Observatory ofEconomic Complexity, over 40% of North Korea'simports are food products, while under 1% of itsexports are food. Over 40% of its exports aremachinery, while under 1% of its imports aremachinery.Assume machinery is labor-intensive, and food island-intensive. Is North Korea abundant in land orlabor according to the Heckscher-Ohlin theorem?What would be the impact of removing sanctions(allowing more trade) on the real wage in NorthKorea according to the H-O theorem?What is the impact of opening trade on the realrent of land (the return to holding land) accordingto the H-O theorem?Which group in North Korea, workers orlandowners, would have supported policies thatwould limit free trade? Please briefly explain.

The factors of production are resources that are the building blocks of the economy; they are what…

Answered: to the H-O theorem? Which group in…

to the H-O theorem? Which group in North Korea, workers or landowners, would have supported policies that would limit free trade? Please briefly explain.

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

Assume that there are two factors of production:
land and labor. According to the Observatory of
Economic Complexity, over 40% of North Korea's
imports are food products, while under 1% of its
exports are food. Over 40% of its exports are
machinery, while under 1% of its imports are
machinery.
Assume machinery is labor-intensive, and food is
land-intensive. Is North Korea abundant in land or
labor according to the Heckscher-Ohlin theorem?
What would be the impact of removing sanctions
(allowing more trade) on the real wage in North
Korea according to the H-O theorem?
What is the impact of opening trade on the real
rent of land (the return to holding land) according
to the H-O theorem?
Which group in North Korea, workers or
landowners, would have supported policies that
would limit free trade? Please briefly explain.

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