Question

Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread. Bread is capital intensive,...

Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread. Bread is capital intensive, while wine is labor intensive. France is capital abundant, while Italy is labor abundant.(22 points total, 2 points each)

For questions (5)-(8), consider the movement from closed-economy to free trade.

(5). The capital owners in France support free trade.

(6) French workers’ real wage for bread increases.

(7). The real rental rate of capital for wine increases in Italy.

(8). The relative demand for labor increases in France.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

5)the statement that The capital owners in France support free trade is true because as the H-O theories says free trade will lead to increase in real wage rate of factors after specialisation and trade.

6) french workers’ real wage for bread increases this statement is false because after specialisation demand for capital will increase in france which will lead to increase in rent and not real wage rate.

7) The real rental rate of capital for wine increases in Italy the statement is false. because itally is labour abundant and will produce wine so the real wage of labour will increase and not rent of capital.

8)The relative demand for labor increases in France. this statement is false because after specialisation and trade the demand for capital will increase in france and not for labour.

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
（True or False questions, please provide reasons) Consider the following Heckscher-Ohlin model. France and Italy produce...
（True or False questions, please provide reasons) Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread. Bread is capital intensive, while wine is labor intensive. France is capital abundant, while Italy is labor abundant. consider the movement from closed-economy to free trade (1) French workers’ real wage for bread increases. (2). The real rental rate of capital for wine increases in Italy. (3). The relative demand for labor increases in France.
（True or False questions) Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread....
（True or False questions) Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread. Bread is capital intensive, while wine is labor intensive. France is capital abundant, while Italy is labor abundant. (1). Italy has a larger labor force than France. Italy has a comparative advantage for wine. consider the movement from closed-economy to free trade (2) The marginal product of labor for the wine industry increases in France. (3). The labor-capital ratios of both industries increase in...
（True or False questions, please provide reasons) Consider the following Heckscher-Ohlin model. France and Italy produce...
（True or False questions, please provide reasons) Consider the following Heckscher-Ohlin model. France and Italy produce wine and bread. Bread is capital intensive, while wine is labor intensive. France is capital abundant, while Italy is labor abundant. Assume that going from no trade to free trade, the price of wine rises by 10% for Italy, while the price of bread remains unchanged. (1) The wage of all Italian workers increases by more than 10%. (2) The Italian workers’ real wage...
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...
1. consider the following specific factors model. France and Belgium produce cars using capital and labor,...
1. consider the following specific factors model. France and Belgium produce cars using capital and labor, and produce cheese using land and labor. Capital and land are the specific factors and labor is the mobile factor. In the closed-economy equilibrium, the relative price of cheese is lower in France than in Belgium. (26 points, 2 points each). For each statement, determine whether it is T or F, and then briefly explain why. (1)-(2) are about the closed-economy equilibria in France...
1. Consider the following specific factors model. France and Belgium produce cars using capital and labor,...
1. Consider the following specific factors model. France and Belgium produce cars using capital and labor, and produce cheese using land and labor. Capital and land are the specific factors and labor is the mobile factor. In the closed-economy equilibrium, the relative price of cheese is lower in France than in Belgium. For each statement, determine whether it is true or false, and then briefly explain why.   These questions deal with the movement from no trade to free trade. a....
Heckscher-Ohlin Model Consider two countries, Spain and Italy, where the only two factors of production are...
Heckscher-Ohlin Model Consider two countries, Spain and Italy, where the only two factors of production are capital and labor. Spain has 100 units of capital and 400 units of labor and Italy has 200 units of capital and 100 units of labor. Both countries produce two goods, cheese and suits. The labor share in total production costs is 75% for cheese but only 25% for suits. C. What will happen to the relative price of cheese in Italy when the...
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 a 2 good, 2 country, 2 factor Heckscher-Ohlin model. Taiwan is capital abundant. South Korea...
Consider a 2 good, 2 country, 2 factor Heckscher-Ohlin model. Taiwan is capital abundant. South Korea is labor abundant. Machinery is capital intensive to produce, textiles are labor intensive. The labor wage is w and the cost of capital is r. Consumers in the two countries have identical preferences over the two goods. Answer true or false for each statement below a) In autarky, prices of textiles relative to machinery are higher in South Korea than in Taiwan b) In...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT