An important assumption in the Heckscher-Ohlin model is that the tastes are the same in both...

An important assumption in the Heckscher-Ohlin model is that the tastes are the same in both countries. Suppose that tastes are different in the Home and Foreign for the two goods, airplanes and shirts. Is it possible for a capital-abundant country (Foreign) to export the labor-intensive good (shirts) if tastes are different? If so, draw a PPF-indifference curve diagram for Home and a PPF indifference curve diagram for Foreign that illustrates this case.

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Rahul Sunny answered 2 years ago

Skill premium in the Heckscher-Ohlin Model Suppose that we are within Heckscher-Ohlin model with perfect competition....

Skill premium in the Heckscher-Ohlin Model Suppose that we are within Heckscher-Ohlin model with perfect competition. There are two goods (computers and shoes), and two factors of production: Skilled labor (H) and unskilled labor (L). The country has 10 skilled workers and 20 unskilled workers. Each factor is mobile across industries. The production function in the computer industry is given by: YC = LC1/3 HC2/3. The production function in the shoe industry is given by: YS = LS2/3 HS1/3. Denote...

1- In the Heckscher Ohlin model A- countries have the same tastes, but different technologies. B-...

1- In the Heckscher Ohlin model A- countries have the same tastes, but different technologies. B- trade is driven by differences in consumer preferences C- countries have the same technologies, but different endowments of capital and labor. D- there is a fixed amount of capital in each industry. 2- If in the specific factor model the price of manufactures and the price of food in Gambinia increase by 25%, then a-Employment does not change b-Gambinia fully specializes in production of...

a) The Ricardian Model vs. the Heckscher-Ohlin Trade Model.

Explain in your own words (50 words maximum) each concept below:a) The Ricardian Model vs. the Heckscher-Ohlin Trade Model.b) Shallow vs. Deep Integrationc) The OLI Theory

Heckscher-Ohlin Model Theory of International Trade

. Heckscher-Ohlin Model A. Assumptions of the model B. Factor abundance and the shape of the...

. Heckscher-Ohlin Model A. Assumptions of the model B. Factor abundance and the shape of the PPF C. Factor abundance and the pattern of trade D. Graphical representation of effect of trade on Production and consumption E. Effect of trade on labor demand and factor prices F. The Leontieff paradox

3. The Ricardian Model vs. the Heckscher-Ohlin Trade Model.Discuss the difference between both models, including...

3. The Ricardian Model vs. the Heckscher-Ohlin Trade Model. Discuss the difference between both models, including the PPC (you should be able to draw out the difference for the exam), the income distribution effects of trade.4. According to the following table, which country is relatively more labor-abundant? Explain your answer. Which is relatively more capital-abundant?United States CanadaCapital 40 machines 10machinesLabor 200 workers 60 workers5. Suppose that the United States and Canada have the factor endowments given in the table inQuestion...

We saw that the Heckscher-Ohlin-Vanek prediction does not find support in data. Which of the following assumptions of the Heckscher-Ohlin model is likely to be the culprit

Part A) We saw that the Heckscher-Ohlin-Vanek prediction does not find support in data. Which of the following assumptions of the Heckscher-Ohlin model is likely to be the culprit Different goods have different factor intensities Different countries have different endowments Factors of production are mobile within a country Countries have identical technologies Part B) Which of the following statements describes offshoring? a)It refers to the export of capital services by a country. b)It refers to the export of labor services...

Assume the Heckscher-Ohlin model where there are two goods, autos and cloth.

Assume the Heckscher-Ohlin model where there are two goods, autos and cloth. The home country is capital abundant while the foreign country is labor abundant. Autos are capital intensive while cloth is labor intensive. What effect does trade have on aggregate demand and supply of labor in the home country? a. The aggregate labor demand curve shifts left while the labor supply curve is unchanged b. Both the aggregate labor demand and labor supply curves shift left c. The aggregate labor demand curve...

In the Heckscher-Ohlin model, suppose that Home is abundant in skilled labor and that the computer...

In the Heckscher-Ohlin model, suppose that Home is abundant in skilled labor and that the computer industry is skilled-labor intensive. Both countries, Home and Foreign have always been open to trade, but a large earthquake kills half of Foreign’s skilled and unskilled workers. Which of these variables increase or decrease as a consequence? Why? Explain. a) Relative price of computers in Home b) Relative price of computers in Foreign c) Output of the computer industry in Home d) Skill premium...

This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of...

This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of handmade rugs and assembly line robots in Canada and India. a. Which country would you expect to be relatively labor-abundant, and which is capital-abundant? Why? b. Which industry would you expect to be relatively labor-intensive, and which is capital-intensive? Why? c. Given your answers to (a) and (b), draw production possibilities frontiers for each country. Assuming that consumer preferences are the same in both...

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