Countries A and B have two factors of production, capital, and labor, with which they can produce
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Countries A and B have two factors of production, capital, and labor, with which they can produce two goods X and Y. Technology is the same in the two countries. X is capita; intensive; A is capital abundant. Analyze the effect on the terms of trade and on the two counties’ welfare (including factor payments) of the following:
An increase in A’s capital stock
An increase in A’s labor supply
An increase in B’s capital stock
An increase in B’s labor supply
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
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