Two countries, Home (H) and Foreign (F) trade agricultural and manufacturing goods (A and M, respectively). Production of either good requires skilled and unskilled labor. Unskilled workers can freely move from one sector to another, while skilled workers cannot. (a) Identify mobile and industry-specific factors of production
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- Assume that Trinbago is a small country that produces wine and motor vehicles, where motor vehicles are capital-intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin (H-O) assumptions hold. The other country in the model is Vincyland. Questions: Give a short background on the Heckscher-Ohlin Trade model and then answer the following questions. (a) Based on the H-O assumptions, which good should Vincyland export, and why? (b) What trade pattern would occur if the Leontief Paradox holds? Which two (2) explanations of the Leontief Paradox most strongly support the H-O theory? Give the reasons. (c) In autarky, according to Ohlin, how does Trinbago’s relative price of labor compare to Vincyland’s?Assume that Trinbago is a small country that produces wine and motor vehicles, where motor vehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin (H-O) assumptions hold. The other country in the model is Vincyland. Questions: Give a short background on the Heckscher-Ohlin Trade model and then answer the following questions. (a) Based on the H-O assumptions, which good should Vincyland export, and why? (b) What trade pattern would occur if the Leontief Paradox holds? (c) Which two (2) explanations of the Leontief Paradox most strongly support the H-O theory? Give the reasons. (d) In autarky, according to Ohlin, how does Trinbago’s relative price of labour compare to Vincyland’s? (e) Show the necessary graphs to fully explain all requested effects. Ensure to label graphs and give brief explanations. (f) Given that Vincyland is a small country, examine the partial equilibrium welfare effects associated with imposing a tariff on their import…When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Candonia and Sylvania. Both countries Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure. produce lemons and coffee, each initially (i.e., before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of coffee, as indicated by the grey stars marked with the letter A. Candonia has a comparative advantage in the production of lemons, while Sylvania has a comparative advantage in the production of coffee. Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative…
- When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Desonia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 18 million pounds of grain and 9 million pounds of sugar, as indicated by the grey stars marked with the letter A. Maldonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR) , while Desonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR) . Suppose that Maldonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two…Suppose that Country A can produce 6060 bags of sugar or 3030 bags of flour per worker hour. Country B can produce 4040 bags of sugar or 1010 bags of flour per worker hour. Assume that there is 100%100% specialization, and each country has 55 worker hours.If each country specializes in its comparative advantage, calculate the quantity of the good that Country B should produce.Refer to Table 1-1 Assume that Derryland and Whetonia each has 40 labor hours available and that there is no trade. Each country consumes what it produces. Assume now that, without trade, Derryland spent 28 hours producing cheese (they really like cheese there!) and the remaining 12 hours producing bread. Whetonia spent 20 hours producing cheese and 20 hours producing bread. (Whetonians prefer a higher bread to cheese ratio.) What is the total output of CHEESE produced by both countries combined?
- When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Candonia and Lamponia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of grain and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. SUGAR (Millions of pounds) 64 56 48 PPF 40 32 24 16 8 0 0 8 Candonia 16 24 32 40 48 GRAIN (Millions of pounds) 56 64 (?) SUGAR (Millions of pounds) 64 56 48 40 32 24 16 8 0 PPF ———— 0 8 Lamponia A 16 24 32 40 48 GRAIN (Millions of pounds) 56 64 ? Candonia has a comparative advantage in the production of sugar while Lamponia has a comparative advantage in the grain production of ▼ . Suppose that Candonia and Lamponia…home cheese alc=1hr/kg wine alw=2hrs/gallon foreign cheese alc*=6hrs/kg wine alw*=3hrs/gallon Calculate the Home country's opportunity cost of producing cheese. In which product does the Home (Foreign* ) country has an absolute advantage? Show in which product does the Home (Foreign* ) country has comparative advantage? Calculate the relative supply (RS) With trade, what is the equilibrium range that the relative price of cheese to wine will settle? Supposing that the intersection of RS and RD occurs at PC /PW = 1, what is the implication?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 Both owners of K and owners of A will benefit. Owners of A will benefit. Owners of K will benefit. Neither owners of K nor owners of A will benefit. Include diagram*** and explanation attached is graph for reference
- When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Freedonia and Lamponia. Both countries produce potatoes and tea, each initially (i.e., before specialization and trade) producing 6 million pounds of potatoes and 3 million pounds of tea, as indicated by the grey stars marked with the letter A. Suppose that Freedonia and Lamponia agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 2 million pounds of potatoes for 2 million pounds of tea. This ratio of goods is known as the price of trade between Freedonia and Lamponia. The following graph shows the same PPF for Freedonia as before, as well as its…Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (g) If the terms of trade is 2 to 1 in favour of the country with the comparative advantage in food. Determine the combination of the two goods that each country will consume after trade if the country with the comparative advantage in fuel imports 4000 units of food. Label this point B and B* respectively. h) Who gains from trade? Who loses? What is the impact if any on the world? (i) What should the terms of trade be to make trade beneficial for BOTH Japan and Peru? Explain.When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. Both countries produce potatoes and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of potatoes and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. * FIRST PICTURE HERE Candonia has a comparative advantage in the production of , while Lamponia has a comparative advantage in the production of . Suppose that Candonia and Lamponia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of -- million pounds of potatoes and -- million pounds of sugar. Suppose…