Question
In: Economics
Consider the following information on factor endowments for the two countries of Spain and Germany. Factor...
Consider the following information on factor endowments for the two countries of Spain and Germany.
| Factor Endowmetns | USA | China |
| Labor Force | 30 million | 15 million |
| Capital Stock | 200,000 machines | 400,000 machines |
1) If these two countries agrees to trade, what kind of restructuring would the countries face?
2) Would there be complete specialization in each country?
3) Would capital and labor remain fully employed in both the countries with persisting trade? Why or why not?
4) How would income distribution for labor and capital change in each of the two countries with persisting trade? Explain your answer.
Please answer these questions and not stuff not pertaining to these questions.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
In terms of factor endowments, India is somewhat similar to other developing countries trading with the...
In terms of factor endowments, India is somewhat similar to
other developing countries trading with the U.S.: they all are
labor abundant and capital scarce. Now that India is also opening
up to world trade, how would you expect this to affect the welfare
of the U.S.? Illustrate your answer in a
relative-demand-relative-supply diagram.
Use the Rybczynski theorem to prove that the more dissimilar countries become in their factor endowments,...
Use the Rybczynski theorem to prove that the more dissimilar
countries become in their factor endowments, the more likely it is
to obtain complete specialization once trade begins
Consider two countries, Spain and Italy, where the only two factors of production are capital and...
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. (2 points for each part)
A. Which country is labor abundant? Explain. ( very helpful if...
Suppose there are just two countries, the US and Germany. Consider the following: US Current Account...
Suppose there are just two countries, the US and Germany.
Consider the following: US Current Account balance (BCA): -$400 US
Financial Account balance (BKA): +$315 The balance on the US
Reserve Account is +$85, and it means that US holdings of foreign
currency denominated assets decreased The balance on the US Reserve
Account is +$85, and it means that US holdings of foreign currency
denominated assets increased The balance on the US Reserve Account
is -$85, and it means that...
“When differences between countries’ factor endowments are significant the inter-industry trade will dominate trade flows, but...
“When differences between countries’ factor endowments are
significant the inter-industry trade will dominate trade flows, but
when these differences are small or non-existent the intra-industry
trade will tend to dominate trade flows.” Do you agree or disagree?
Evaluate fully. Make sure you outline the key theory (ies) of
intra-industry trade in answering this question.
Spain and England were the first two countries to have explorers circumnavigate the globe. Spain accomplished...
Spain and England were the first two countries to have explorers
circumnavigate the globe. Spain accomplished the first voyage
around the world under the leadership of Ferdinand Magellan in
1522. The English voyage, led by Sir Francis Drake, was completed
in 1580 (Drake’s expedition was actually the third to
circumnavigate the earth as another Spanish crew had completed the
journey in the interim). This essay assignment provides you with
the opportunity to read about and study firsthand accounts of these...
Situation: Suppose there are two countries, Germany and India, and two goods, bicycles and textiles. Germany...
Situation: Suppose there are two countries, Germany and India,
and two goods, bicycles and textiles. Germany has a resource
endowment of 42,444,325 units of labor and 8,873,941 million units
of capital, while India has a resource endowment of 475,090,729
units of labor and 10,299,894 million units of capital. Each
bicycle requires 100 units of capital and 10 units of labor to
produce, and each unit of textiles requires 40 units of capital and
2 units of labor to produce.
Question:...
Situation: Suppose there are two countries, Germany and India, and two goods, bicycles and textiles. Germany...
Situation: Suppose there are two countries, Germany and India,
and two goods, bicycles and textiles. Germany has a resource
endowment of 42,444,325 units of labor and 8,873,941 million units
of capital, while India has a resource endowment of 475,090,729
units of labor and 10,299,894 million units of capital. Each
bicycle requires 100 units of capital and 10 units of labor to
produce, and each unit of textiles requires 40 units of capital and
2 units of labor to produce.
Question:...
5. Consider two countries: Poland (whose currency is the zloty) and Germany (whose currency is...
5. Consider two countries: Poland (whose currency is the zloty)
and Germany
(whose currency is the euro). Shown
below are average annual rates of inflation
expected over the next twenty years.
The numbers in the table are filled in for
Germany. Make up numbers for Poland
that are consistent with two conditions:
(1) that productivity growth in
Poland’s traded sector will be sufficiently rapid to
bring about a fall in the relative
price of traded...
Consider two countries, Germany and Italy, which produce two goods, beer and cheese. The labour requirements...
Consider two countries, Germany and
Italy, which produce two goods, beer and cheese. The labour
requirements (in hours) for producing one unit of these goods in
each country are:
Beer
Cheese
Germany
aLB = 2
aLC =
3
Italy
aLB* = 5
aLC* = 4
Which country has the absolute advantage in the production of
beer and which in the production of cheese? (Mark:
0.2)
Which country has the comparative advantage in the production of
beer and which in the...
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