Question

1.There are two countries, Home and Foreign. Both countries produce food (F) and cloth (C) using...

1.There are two countries, Home and Foreign. Both countries produce food (F) and cloth (C) using labour (L) and capital (K). Labour and capital are currently allocated in the following way between the sectors.

Home: LF = 200 KF = 150 LC = 100 KC = 50
Foreign: LF* = 600 KF* = 300 LC* = 480 KC* = 120

Which of the following is TRUE?

Select one:
a.

Not enough of information to tell which country is labour or capital abundant.
b.

Foreign is both labour-abundant and capital-abundant.
c.
Foreign is labour-abundant and Home is capital-abundant.
d.

Foreign is capital-abundant and Home is labour-abundant.

2.Suppose that there are two factors, capital and land, and that the United States is relatively land-endowed while the European Union is relatively capital-endowed. According to the Heckscher-Ohlin model, which one is correct?
Select one:
a. European landowners should support US-European free trade.
b. European capitalists should support US-European free trade.
c. all capitalists in both countries should support free trade.
d. all landowners should support free trade.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1> Total capital is Home is 150+50 = 200

Total labor is Home is 200+100=300

Total capital is Foreign is 300+120 = 420

Total labor is Foreign is 600+480=1080

Capital Labor ratio in Home is 200/300=2/3

Capital Labor ratio in Foreign is 420/1080=0.38888

So, Home is more Capital abundant and foreign is more labor abundant

Thus, the correct option is C

2> b. European capitalists should support US-European free trade.

Since capital-intensive industries will thrive in Europe, the free trade will make the capitalist richer as they can sell those good at a higher price in the US, so it makes them support free trade.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In the Heckscher-Ohlin model with two large countries, the US and China; two goods, cloth, and...
In the Heckscher-Ohlin model with two large countries, the US and China; two goods, cloth, and wheat; and two factors, capital, and labor. The US is relatively capital abundant. Cloth is relatively labor-intensive. When these two countries move from autarky to trade with one another, we expect A a decrease in the relative price of wheat to cloth in the US and an increase in the relative price of wheat to cloth in China. B an increase in the relative...
) Consider Home produces computers(C) and food(F) using capital(C) and labor(L). The unit factor requirements are...
) Consider Home produces computers(C) and food(F) using capital(C) and labor(L). The unit factor requirements are fixed and given by: aLC = 2, aKC = 6, aLF = 3, aKF = 4. The total labor supply is 900 and the total capital stock is 1,500. (1 point) a. Which good is relatively labor intensive? Which good is relatively capital intensive? (2 points) b. Derive and draw the PPF of this country. At which point on the PPF are both factors...
1. When Home has comparative advantage over Foreign in cloth, A. The Autarky relative price of...
1. When Home has comparative advantage over Foreign in cloth, A. The Autarky relative price of cloth in terms of wine is lower at Home than in Foreign B. Foreign must have comparative advantage over Home in wine C.Home will specialize in producing cloth when there is free trade D. Both (A) and (B) are correct E. (A), (B), and (C) are correct. 2. In the Ricardian Model, with countries Home and Foreign and with two goods under trade, assume...
Consider a model where the Hecksher-Ohlin assumptions apply. There are two countries, Home and Foreign, two...
Consider a model where the Hecksher-Ohlin assumptions apply. There are two countries, Home and Foreign, two factors of production, labour and capital, and two goods, labour-intensive socks (S) and capital-intensive cars (C). Home is capitalabundant and Foreign is labour-abundant. Draw the Production Possibility Frontier (PPF) for Foreign. You must have S on the horizontal axis and C on the vertical axis. On your diagram show how much of each good Foreign produces at the world prices that both countries face....
Consider a model where the Hecksher-Ohlin assumptions apply. There are two countries, Home and Foreign, two...
Consider a model where the Hecksher-Ohlin assumptions apply. There are two countries, Home and Foreign, two factors of production, labour and capital, and two goods, labour-intensive socks (S) and capital-intensive cars (C). Home is capitalabundant and Foreign is labour-abundant. Draw the Production Possibility Frontier (PPF) for Foreign. You must have S on the horizontal axis and C on the vertical axis. On your diagram show how much of each good Foreign produces at the world prices that both countries face....
Consider a Heckscher- Ohlin model with two countries, Home and Foreign, two goods, tomatoes and wheat,...
Consider a Heckscher- Ohlin model with two countries, Home and Foreign, two goods, tomatoes and wheat, and two factors of production, labor and land. Countries have identical technologies, so that a unit of tomatoes takes 10 hours of labor and 5 acres of land, and a unit of wheat takes 4 hours of labor and 8 acres of land. Assume Home has 100 hours of labor and 80 acres of land, while Foreign has 60 hours of labor and 40...
Consider the Ricardian model with two countries, Home and Foreign, and 2 goods, cloth and widgets....
Consider the Ricardian model with two countries, Home and Foreign, and 2 goods, cloth and widgets. Based on the information below, answer questions 7 through 10: Marginal Product of Labour Cloth Widgets Total endowment of Labour (L) Home 10 15 200 Foreign 10 30 100 7. Suppose the world relative demand for cloth is given by (C/W) = 3 - (pC/pW) where C denotes clothes and W widgets. The equilibrium relative price of cloth with trade will then be: A....
Consider a world with two countries, Home and Foreign. Assume there are only two products (industries)...
Consider a world with two countries, Home and Foreign. Assume there are only two products (industries) in the world, Wine and Cloth. The table below lists the productivity of each industry in the two countries. Home has 900 units of labour, and Foreign has 900 units labour as well. Units of Output per Labour Wine Cloth Home Foreign 4 2 4 5 The complete long question contains the following questions. 1. Suppose without trade, Home produces 2000 units of Wine....
Consider a Heckscher- Ohlin model with two countries, Home and Foreign, two goods, tomatoes and wheat,...
Consider a Heckscher- Ohlin model with two countries, Home and Foreign, two goods, tomatoes and wheat, and two factors of production, labor and land. Countries have identical technologies, so that a unit of tomatoes takes 10 hours of labor and 5 acres of land, and a unit of wheat takes 4 hours of labor and 8 acres of land. Assume Home has 100 hours of labor and 80 acres of land, while Foreign has 60 hours of labor and 40...
Assume two countries and two goods: Home and Foreign, and shoes and computers. Also assume that...
Assume two countries and two goods: Home and Foreign, and shoes and computers. Also assume that Home is labor abundant, Foreign is capital abundant, the production of shoes is a labor intensive, and the production of computers is capital intensive. If Home and Foreign engage in trade, the relative price of computers increases in Home ( PL increases by 15% and Ps remains the same). Given the following information, Computers Sales revenue: $100 Earnings of labor: $50 Payments to Capital:...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT