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.Identify mobile and industry-specific factors of production(b)Suppose Home is relatively more productive in agriculture than Foreign. Drawtwo diagrams, one for H one for F, which illustrate no-trade equilibrium in each county.Compare relative price of agricultural goods in two countries. (c) Based on your answer in part (b), explain which good Home country will exportand import, and why? Explain how openness to foreign trade changes relative price ofagricultural goods at Home.(d) Using a diagram, illustrate the effect of a reduction in price of Home countryimports on Home country's equilibrium nominal wage.

International trade is the exchange of goods and services between two or more countries. It involves…

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

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

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter19: International Trade

Section: Chapter Questions

Problem 3QFR

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