Two countries - home and foreign Two goods - food and cloth Explain the pattern of...

Two countries - home and foreign Two goods - food and cloth Explain the pattern of trade in the multi-good Ricardian model.

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Rahul Sunny answered 2 years ago

International Economics Question!! Home and Foreign are two countries that produce cloth and food, and trade...

International Economics Question!! Home and Foreign are two countries that produce cloth and food, and trade these goods with each other. Both goods require labor as an input. Capital is an input for cloth production, and land is an input for food production. In other words, capital and land are specific factors for cloth and food production respectively. There are diminishing returns to labor. Suppose that the capital stock of Home increases due to an external shock. a) How would...

Consider a world with two countries, Home and Foreign, both able to produce two goods: cloth...

Consider a world with two countries, Home and Foreign, both able to produce two goods: cloth and tablet computers. The production of both goods uses capital and labor in fixed proportions, with the tablets industry using more capital per worker than the cloth industry. The units of each input needed to produce one unit output are given by: capital Labor Cloth 1 2 Tablets 2 1 Both countries have 150 units of capital available for production, but the Home country...

There are two countries Home and Foreign. They can produce two goods, apples and bananas. Home...

There are two countries Home and Foreign. They can produce two goods, apples and bananas. Home has 1,200 units of labor available and Foreign has a labor force of 800. The table below contains the unit labor requirement in Foreign and Home for each of two goods. Banana Apples Home aB = 1 hour per pound aA = 2 hours per pound Foreign aB = 4 hours per pound aA = 5 hours per pound 1. Suppose that, after opening...

Consider two countries, Home and Foreign, trading two goods, Rice and Car. The Home country is...

Consider two countries, Home and Foreign, trading two goods, Rice and Car. The Home country is endowed with abundant capital relative to labor and hence has a comparative advantage to specialize in Cars; whereas the Foreign country is endowed with abundant labor and specializes in Rice. Once they start trading, the price of cars decreases, and the price of rice increases in the Foreign country. How would the increase in the price of rice affect the income of each of...

Consider two countries, Home and Foreign, trading two goods, Rice and Car. The Home country is...

Consider two countries, Home and Foreign, trading two goods, Rice and Car. The Home country is endowed with abundant capital relative to labor and hence has comparative advantage to specialize in Cars; whereas the Foreign country is endowed with abundant labor and specializes in Rice. Once they start trading, the price of car decreases, and the price of rice increases in the Foreign country. How would the decrease in the price of car affect the income of each of the...

There are two countries, Home (H). and Foreign (F), and two goods, Automobiles (A) and Baseballs...

There are two countries, Home (H). and Foreign (F), and two goods, Automobiles (A) and Baseballs (B). Assume that H is labor-abundant and that A is capital-intensive. a. Which country has a comparative advantage in A? What is the trade pattern between the two countries? b. With A on the horizontal axis, draw the PPF and indifference curve for the H in autarky. Indicate the equilibrium production point and the relative price of A.

Consider a country, Home, which produces two goods, Cloth and Food, using capital and labour with...

Consider a country, Home, which produces two goods, Cloth and Food, using capital and labour with a constant-return-to-scale technology. Food production is capital-intensive and cloth production is labour-intensive. Capital and labour can move freely between the two industries. Finally, let’s assume that Home’s consumption decisions can be represented using regularly-shaped indifference curves. 1.When Home is not engaged in international trade, use a graphic to illustrate the consumption and production points in Home in autarky (pre-trade situation). (2 points) 2. Assume...

There are two countries, Home and Foreign. The two countries are identical except that Home has...

There are two countries, Home and Foreign. The two countries are identical except that Home has a labor force of 100 and Foreign has a labor force of 200. Given this allocation of labor across Home and Foreign, the value of the marginal product of labor in Home is 30 and the value of the marginal product of labor in Foreign is 20. If labor were to be free to move, the wage in both countries would be25. fi mmigration...

There are two countries, Home and Foreign. The two countries are identical except that Home has...

There are two countries, Home and Foreign. The two countries are identical except that Home has a labor force of 100 and Foreign has a labor force of 200. Given this allocation of labor across Home and Foreign, the value of the marginal product of labor in Home is 30 and the value of the marginal product of labor in Foreign is 20. If labor were to be free to move, the wage in both countries would be 25. What...

Suppose two countries, home and foreign, produce two goods, timber and televisions. Assume that land is...

Suppose two countries, home and foreign, produce two goods, timber and televisions. Assume that land is specific to timber, capital is specific to televisions, and labor is free to move between the two industries. When the Home country moves into doing free trade with the Foreign country, the Home country exports timber. True or False. Explain 1. The Home country produces only timber under free trade. 2. Going from closed economy to free trade, the opportunity cost of TV increases...

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Two countries - home and foreign Two goods - food and cloth Explain the pattern of...

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