Question: Consider the Specific Factors model studied in class (all the standard assumptions hold). There are many countries, two commodities (Cars and Soy), two specific factors

Consider the Specific Factors model studied in class (all the standard assumptions hold). There are many countries, two commodities (Cars and Soy), two specific factors (Machines and Tractors) and one mobile factor (Labor). The production of Cars (C) uses labor (LC) and Machines (M), while the production of Soy uses Tractors (T) and Labor (LS). Consider the "small" country of Islandia that is relatively Machine abundant (i.e. M / T > (M/T) rest of the world ) Answer the following questions. Justify fully. Use a diagram or an equation when you are able to do so.

Effects of the movement from Autarky to Free Trade

2. Use a diagram to show how the Labor allocation among sectors changes when the country moves from autarky to free trade.

3. Show whether Machinery owners are better off or worse off when the country moves from autarky to free trade. Use a diagram/precise explanations.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Consider the Specific Factors model studied in class (all the standard assumptions hold). There are many countries, two commodities (Cars and Soy), two specific factors (Machines and Tractors) and...

de. (3) (8 pts) Show whether Machinery owners are better off or worse off when the country moves from autarky to free trade. Use a diagram/precise explanations. Consider the Specific Factors model...

Please help me with the questions below. Thank you! Answer the questions below for this year and last year, using your SEC 10-K: Link to SEC...

Answer the questions below for this year and last year, using your SEC 10-K: Link to SEC 10-K:http://d1lge852tjjqow.cloudfront.net/CIK-0000315189/ceea88ae-ba2b-4204-9b4a-2c9a06e40401.pdf?noexit=true...

Can you please help me solve these 10 Econ questions? I also attached the chapter just in case. Thanks so much!! :) MARKETS AND HOW THEY WORK 177 9.0 CHAPTER 9 LEARNING GOALS After reading this...

View the 2013 Annual Report for the Ford Motor Company, a Fortune 50 company, linked here as well as on the Course Information page. Using this report, answer the following questions: Does the...

Assuming that all revenues were net credit sales, and that the total accounts receivable (net) at the end of 2011 were $8,281 million, compute the receivables turnover for 2015 and 2014. (Hint:...

1. Select only one of the following financial statements to discuss; balance sheet, income statement, or statement of cash flows. 2. Describe 3 uses of the financial statement you chose.Hint: I think...

If the later flight was actually the next day (and the airline offered you an accommodation voucher along with the meal vouchers) and you would be late getting into work, would you make the same...

In Problems 12.36 and 12.37, what are the critical values from Table E.4 if the level of significance is = 0.05 and H1 is as follows: a. 12? b.

2 2 Multiple Choice 1 point What is the maximum amount of Social Security benefits that may be subject to income taxation? 2 6 0 % 3 5 % 2 7 2 8 5 0 % 8 5 %

Select a country with a high GDP (real or nominal) and a country with a low GDP( real it nominal) Contrast what the level of GDP in the countries means for consumers and producers. Based on your...

2. In this chapter, the reader should reflect on the following concepts:

1. To provide an understanding of how emotions are regulated by the development of relationships between actors in a communication situation.

Positive effect on trusting others, and also improvements in the final results.