Question

question 19

Japan and China both produce TVs and shoes. Japan is relatively capital abundant while China is relatively labor abundant. In the two countries, the production of TVs is relatively more capital intensive compared to the production of shoes. Given the factor endowment theory, Japan:

		Has comparative advantage in the production of shoes.
		Should specialize in and export TVs
		Has absolute advantage in the production of shoes
		Absolute advantage in the production of TVs

question 20

According to Staffan Linder,

		A nation will export the commodity in which it has an absolute advantage.
		Trade between two countries tends to be most pronounced when the countries find their per capita income levels to be approximately the same
		Trade between two countries tends to be most pronounced when the countries experience economies of large-scale production over large output levels
		Factor prices across ccountries should equalize over time

Answer 1

19. In economics a countries factor endowment is commonly understood as the amount of land,labor,capital,entrepreneurship that a country posseses and can exploit for manufacturing.Countries with a large endowment of resources tend to be more prosperous than those with small endowment, all other things being equal.The development of sound institution to access and equitably distribute these resources.however is necessary in order for a country to obtain the greatest benefit from its factor endowment.

Here it is said that japan is a capital abundant nation.And the production of TV is more capital intensive.So according to the above mentioned rules TV manufacturing is more and more profitable in Japan

''SO JAPAN SHOULD SPECIALIZE IN AND EXPORT TVs''

20. LINDER HYPOTHESIS

Linder hypothesis is an economic hypothesis hat posists countries with similar percapita income will consume similar quality products, and that this should be lead to them trading with each other.The linder hypothesis suggest countries will specialize in the production of certain high quality goods, and will trade these goods with countries that demand these goods.This theory was proposed by Stafen Linder in 1961.

So according to the above mentioned reasons the answer is that, ''TRADE BETWEEN TWO COUNTRIES TENDS TO BE MOST PRONOUNCED WHEN THE COUNTRIES FIND THEIR PER CAPITA INCOME LEVELS TO BE APROXIMATELY THE SAME''