Question

Suppose that as the U.S. starts trading, the price of aircraft (capital intensive good) increases by...

Suppose that as the U.S. starts trading, the price of aircraft (capital intensive good) increases by 6% and the price of textiles (labor intensive good) decreases by 3%.

According to the magnification effect, the price of capital must _______   by _______   than 6%, and the price of labor must _____   by _____ than 3%. If the price of capital increases by more than 6%, _________ are better off whereas _____________   are worse off.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Suppose that a relatively capital-abundant country is exporting the capital-intensive good and importing the labor-intensive good,...
Suppose that a relatively capital-abundant country is exporting the capital-intensive good and importing the labor-intensive good, but that the “specific factors” model of Chapter 8 applies rather than the Heckscher-Ohlin model. Assess the effect on the return to labor of the imposition of a tariff on the labor-intensive good.
Suppose that country A produces two goods (a labor-intensive good X, furniture, and a capital-intensive good...
Suppose that country A produces two goods (a labor-intensive good X, furniture, and a capital-intensive good Y, autos) and is considering to form a free trade agreement with one of its trading partners. The future free trade agreement is strongly opposed by labor unions in country A. Could you infer which type of country (namely, capital or labor abundant) country A and its trading partner are, respectively? What would happen to the two countries’ w/r ratios (the ratios of wage...
Suppose that a relatively capital-abundant country is exporting the capitalintensive good and importing the labor-intensive good,...
Suppose that a relatively capital-abundant country is exporting the capitalintensive good and importing the labor-intensive good, but that the “specificfactors” model of Chapter 8 applies rather than the Heckscher-Ohlin model. Assess the effect on the return to labor of the imposition of a tariff on the laborintensive good.
Suppose Sweden and Norway produce paper and bread using capital and labor. Paper is capital-intensive and...
Suppose Sweden and Norway produce paper and bread using capital and labor. Paper is capital-intensive and bread is labor intensive. Sweden has 600 workers and 500 units of capital, and Norway has 400 workers and 400 units of capital. (True or False) State reasons. (1). Sweden is abundant in capital. (2). Norway exports paper and Sweden exports bread under free trade. For questions (3)-(12), consider the movement from closed-economy to free trade. (3). The marginal product of labor for the...
Problem 6. Suppose that the production of airframes (for aircraft) uses two inputs: capital (good x)...
Problem 6. Suppose that the production of airframes (for aircraft) uses two inputs: capital (good x) and labor (good y). The production function is f(x, y) = xy. Assume that the price of capital is $1 per unit, and the price of labor is $10 per unit. The manufacturer wants to make 121,000 airframes. Find the cost-minimizing combination of capital and labor inputs
According to the income effect, when the price of a good increases, the consumer’s spending power...
According to the income effect, when the price of a good increases, the consumer’s spending power _____________. As spending power decreases, ________ of a normal good will be demanded. a. increases; more b. increases; less c. decreases; less d. decreases; more The income effect implies that as the price of a good increases, your ________ income will ________. a. nominal; increase b. nominal; decrease c. real; decrease. d. real; increase There is an increase in the price of pretzels (a...
Suppose that you observe that when the price of Good 1 increases, the total consumption of...
Suppose that you observe that when the price of Good 1 increases, the total consumption of Good 1 decreases by 1. Suppose further that you know that with the new prices, holding utility constant, the consumer would have chosen to consume 17 less units of the good (substitution effect). What is the magnitude of the income effect and what type of good is it?
Suppose labor and capital are substitute resources, and the price of capital decreases. A. What happens...
Suppose labor and capital are substitute resources, and the price of capital decreases. A. What happens to the demand for labor and capital? B. Do the producers produce more or less of the final good? C. Now suppose labor and capital are complement resources, and the price of capital decreases. Do the producers produce more, less, or the same amount of the final good? I understand the answer to part A but I am unsure about B and C. Please...
10. When the price of a good changes, the total effect of the price change on...
10. When the price of a good changes, the total effect of the price change on the quantities purchased can be found by comparing the quantities purchased A) on the old budget line and the new budget line. B) on the original indifference curve when faced with the original prices and when faced with the new prices. C) on the new budget line and a hypothetical budget line that is a parallel shift back to the original indifference curve. D)...
Suppose that the price of a good decreases and therefore the Consumer Surplus increases. This is...
Suppose that the price of a good decreases and therefore the Consumer Surplus increases. This is due to: buyers leaving the market and remaining buyers paying a higher price. buyers entering the market and remaining buyers paying a higher price. buyers leaving the market and remaining buyers paying a lower price. buyers entering the market and remaining buyers paying a lower price. 2. In the market for cars, the government levies a new tax on buyers. In this market, the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT