Question: Heckscher-Ohlin Model with factor substitution. Consider the following technologies Qc = L^(1/2)K^(1/2), Qf= L^(1/4)K^(3/4) The home country has the following endowment L = 100, K

Heckscher-Ohlin Model with factor substitution. Consider the following technologies Qc = L^(1/2)K^(1/2), Qf= L^(1/4)K^(3/4) The home country has the following endowment L = 100, K = 80.

Construct the relative input demand for both goods.

Which product is labor intensive.

Which interval for relative prices of goods corresponds to the complete specialization.

Given w= 1, r = 2 find the corresponding prices of goods for C and F in Autarky. Do we have complete specialization in this case?

Discuss what happens with prices of goods when the country opens for trade with foreign economy with the endowment L* = 90, K* = 90 and the same technologies.

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The feeling of boredom.

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