Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. in the h-o economy, the production of a clothing r

In the H-O economy, the production of a clothing requires 4 labor units and 1...

70.2K

Verified Solution

Question

Finance

In the H-O economy, the production of a clothing requires 4 labor units and 1 capital unit, while the production of 1 unit of food involves the use of 1 unit of labor and 1 unit of capital. In the initial equilibrium in the COUNTRY, the volume of labor force (L) is 1000 and the volume of capital (K) is 500. The FOREIGN STATE has L = 1000, K = 1000.

1. If both goods were produced simultaneously, what would be the production volumes for each good?

2. After opening up to trade, in which goods would the country specialize (on the basis of which theorem)?

3. On the chart showing world supply and demand (RS, RS *, RD), present this situation. Let us assume that the amount of the labor force does not change, and the amount of capital in the country increases to 600.

4. How will the production of both goods change in this case? Which theorem considered this?

5. What will happen to the terms of trade? Mark this change in the COUNTRY PPF chart. Let us assume that the relative price of food increase.

6. What will happened in terms of rent and wages? Which theorem should be used. Mark that on the proper graph

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Allergic reactions to poison ivy can be miserable. Plant oils cause the reaction. Researchers at Allergy...

Statistics
Q

1. please explain the reason behind ruthenium ligand rate. a) why is it slow? b) what...

Chemistry
Q

What risks does running a platform open up to a platform owner like Facebook? What challenges...

General Management
Q

A company has a December year end and creates checks to pay their vendors towards the...

Accounting
Q

A closed piston cylinder device contains 0 2 kg of air initially at 300 K...

Basic Math
Q

Don t drink and drive A highway safety council reported that there were 3942 fatalities...

Statistics
Q

9 Provide an appropriate response What happens if C 90 when the law of cosines...

Algebra
Q

RGENT: NEED ANSWER ASAP PLEASE RESPOND WITH COPY AND PASTE, NOT ATTACHMENT USE ORIGINAL CONTENT...

Accounting
Q

INFORMATION Donald, an employee of Disney Limited, is remunerated according to Taylor's differential piecework system....

Accounting
Q

What account should never be used in an adjusting journal entry? a. Unearned Service...

Accounting
Q

answers are not: $41.20...$43,20...$7.21 View previous attemp Foto Company makes 6,000 units...

Accounting
Q

Fido, Inc. reported net income totaling $200,000 in 19X2 and $160,000 in 19X1. Partial balance...

Accounting