Within the Heckscher-Ohlin framework, assume that good X is capital intensive and good Y labor intensive....

 

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Within the Heckscher-Ohlin framework, assume that good X is capital intensive and good Y labor intensive. Consider the capital abundant country. Draw a a representative PPF for this country, mark a candidate production point and label it Eo. (10 points) 2. In the diagram for the previous question, now show what happens if the capital stock in the country rises. Mark another candidate production point that reflects the change that occurred (in terms of a higher capital stock) and label this point E1. What happens to the PPF, the production point Eo and production of goods X and Y as a result of the increase in capital stock? (10 points) 3. Use your knowledge about trade policy to evaluate the following statement: "Tariffs have a more negative effect on welfare in large countries than in small countries. "Show your answer graphically (30 points) Within the Heckscher-Ohlin framework, assume that good X is capital intensive and good Y labor intensive. Consider the capital abundant country. Draw a a representative PPF for this country, mark a candidate production point and label it Eo. (10 points) 2. In the diagram for the previous question, now show what happens if the capital stock in the country rises. Mark another candidate production point that reflects the change that occurred (in terms of a higher capital stock) and label this point E1. What happens to the PPF, the production point Eo and production of goods X and Y as a result of the increase in capital stock? (10 points) 3. Use your knowledge about trade policy to evaluate the following statement: "Tariffs have a more negative effect on welfare in large countries than in small countries. "Show your answer graphically (30 points)

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Unfortunately I cant draw diagrams but I can guide you through the concepts 1 PPF for Capital Abundant Country In the HeckscherOhlin framework if good ... View the full answer