1. A capital-abundant nation produces a capital-intensive good and a labor-intensive good. This country trades with the...
Question:
1. A capital-abundant nation produces a capital-intensive good and a labor-intensive good. This country trades with the rest of the world.
a. Graphically show the equilibrium using a PPF and community indifference curve. b. Now, suppose this nation experiences neutral technological progress in the capital-intensive industry. Show this effect in the same diagram and include the new equilibrium. Assume this country is a small
nation. c. Explain the effect of this growth on exports, imports, the relative price of capital-intensive good, and
wellbeing in this small nation.
2. Use the same information as given in question 1.
a. Graphically show the equilibrium using a PPF and community indifference curve. b. Now, suppose this nation experiences neutral technological progress in the capital-intensive industry.
Show this effect in the same diagram and include the new equilibrium. Assume this country is a large nation and that this growth increased wellbeing in this large nation. c. Explain the effect of this growth on exports, imports, and the relative price of capital-intensive good.
3. Use the same information as given in question 1. a. Graphically show the equilibrium using a PPF and community indifference curve. b. Now, suppose this nation experiences neutral technological progress in the labor-intensive industry. Show this effect in the same diagram and include the new equilibrium. Assume this country is a small
nation. c. Explain the effect of this growth on exports, imports, the relative price of capital-intensive good, and
wellbeing in this small nation.
4. Use the same information as given in question 1.
a. Graphically show the equilibrium using a PPF and community indifference curve. b. Now, suppose this nation experiences neutral technological progress in the labor-intensive industry. Show this effect in the same diagram and include the new equilibrium. Assume this country is a large
nation and that this growth increased wellbeing in this large nation. c. Explain the effect of this growth on exports, imports, and the relative price of capital-intensive good.
5. Use the same information as given in question 1. How would neutral technological progress in the capital- intensive industry affect wellbeing in a large nation? Explain all possible outcomes.
Microeconomics
ISBN: 978-0321866349
14th canadian Edition
Authors: Christopher T.S. Ragan, Richard G Lipsey