Question

In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K)...

In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then

A. Both owners of K and owners of A will benefit.

B. Owners of A will benefit.

C. Owners of K will benefit.

D. Neither owners of K nor owners of A will benefit.

Explain your answer in up to 200 words and using a diagram

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The correct option is B. Owners of A will benefit. When tariff is imposed on the imports of wheat, the price of imported wheat relative to its domestic price will increase. This will decrease the demand for imports and increase the domestic demand for wheat. Since wheat production is intensive in the use of land, the demand for land to produce wheat will increase. This will push the price/rent for land and benefit the owners of land. The domestic demand for wheat shifts to the right, raising quantity demanded and price of wheat. This in turn, shifts the derived demand for land, increasing the equilibrium quantity of land and the rents obtained. These are shown in the diagram below.

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
QUESTION 4 In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W),...
QUESTION 4 In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then A. Both owners of K and owners of A will benefit. B. Owners of A will benefit. C. Owners of K will benefit. D. Neither owners of K nor owners of A will benefit. Explain your answer in 200...
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....
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...
Question 3: The Specic Factors Model a.) How does international trade aect the income distribution in...
Question 3: The Specic Factors Model a.) How does international trade aect the income distribution in Ricardo's model? b.) Via which channel could international trade in uence the income-distribution in the short-run? A small open economy produces cheese using land and labor and cars using capital and labor. Land and capital are specic factors of production, labor can move freely between both industries. The economy initially exports cheese and imports cars. The price of cheese on world markets increases suddenly...
Question 2 An economy is described by the specific factors model. Use the information given here...
Question 2 An economy is described by the specific factors model. Use the information given here to answer the following questions: Manufacturing: Sales revenue = PM × QM = 150 Payments to labor = W × LM = 100 Payments to capital = RK × K = 50 Agriculture: Sales revenue = PA × QA = 150 Payments to labor = W × LA = 50 Payments to land = RT × T = 100 Holding the price of agriculture...
2. Use the specific-factors model to answer question 2. Assume that there are two industries, food...
2. Use the specific-factors model to answer question 2. Assume that there are two industries, food and cloth. The food industry uses labor and land as inputs while the cloth industry uses labor and capital as inputs. The marginal product of labor in both industries is as follows:                    Marginal Product of Labor Labor            Cloth                   Food 0               1.4                    1.6 1               1.3                    1.5 2               1.2                    1.4 3               1.1                    1.3 4                1                     1.2 5                .9                    1.1 6                .8                     1 7                .7                     .9...
19. The method we used to determine whether a country/society was better or worse off after...
19. The method we used to determine whether a country/society was better or worse off after a change in policy or a movement towards free trade (from autarky) was a. by calculating the net effects b. by examining the total surplus c. by considering the deadweight loss triangles d. all of the above e. none of the above (not including d) ------------------------------------------------------------------------------------------------------------------------- 20. Consider the small Home country doing tariffs under PC. Which of the following statements is true? a....
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...
1. Use the specific-factors model to answer question 1. Assume that there are two industries, agriculture...
1. Use the specific-factors model to answer question 1. Assume that there are two industries, agriculture and manufacturing. The agricultural industry uses labor and land as inputs while the manufacturing industry uses labor and capital as inputs. The production function for each good is as follows: Agriculture Production Function Land              Labor          QA            20              0                0 20              1               12         20              2               22         20              3              30         20              4              36         20              5              40 20              6               42         Manufacturing Production Function Capital        Labor             QM            20             ...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT