International Economics

Anonymous
timer Asked: Oct 3rd, 2018
account_balance_wallet $10

Question description

Q1. Using the following data on factor endowments of countries X and Y, determine the direction of the international trade under the HO theory. (10 points)

Factor Endowment

Countries

X

Y

Labor Force (in million workers)

28

10

Capital Stock (in thousands of machines)

56

30


Q2. Answer the question(s) below based on the information in the following table under the classical model, where the numbers represent the number of labor hours it will take to produce a unit of the given good.

page4image1689344

Spain

page4image5043008page4image2928160

France

page4image1691216

Grapes

3

page4image5042672page4image1692880

9

page4image1694128

Textiles

1

page4image5042112page4image1696832

2

(1) What country has comparative advantage in Grapes and in Textiles? How? (5 points)

(2) Draw diagrams to illustrate the pre- and post- trade equilibria for each of the two countries including the production points, the consumption points, the international price, and the volumes of exports and imports for each. (7 points)


Q3. France is capital abundant and Italy is labor abundant. Shoes are labor intensive and wheat is capital intensive.

(1) Identify which country has comparative advantage in which good and Why? (5 points)

(2) Draw diagrams to illustrate the pre- and post- trade equilibria for each of the two countries including the production points, the consumption points, the international price, and the volumes of exports and imports for each. (7 points)

Tutor Answer

profesorgary1
School: University of Maryland

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Anonymous
Excellent job

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