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Heckscher-Ohlin Model
Home (H) and Foreign (F) produce autos and shirts using capital (K) and labor (L). Autos are capital intensive relative to shirts. Home is endowed with 500 units of capital and 200 units of labor while Foreign is endowed with 100 units of capital and 50 units of labor. All the other Heckscher-Ohlin assumptions hold.
Problem 1: Draw a PPF-Budget Constraint-Indifference Curve diagram for each country that shows the autarky (no-trade) equilibrium, indicate what the country is producing and consuming in each equilibrium and the relative prices in this equilibrium.
Problem 2: Draw a PPF-Budget Constraint-Indifference Curve diagram for each country that shows the free trade equilibrium, indicate what the country is producing and consuming in each equilibrium and the relative prices in this equilibrium.
Problem 3: Suppose the two countries are trading. Then, activists in H succeed in banning trade. What happens to the real income of labor in F? Use the appropriate diagram in your answer.
Illustrate what will be the new equilibrium price, if the government puts a 15 cent per tax on the candy.
Suppose Jasmine is invited to the following dice gamble: a fair die with 6 sides showing a different number from 1 to 6 will be cast. The number on the top side of the die will be the prize money to the player. She needs to pay $4 to enter the gamble..
Calculate the forward premium on the British pound for the Dutch investor where exchange rates are in euros per pound. Is it positive or negative? why do investors require this premium/discount in equilibrium.
Consider a diagram containing isocost curves for the production of a given level of a final commodity in the household production model. Assume that purchased inputs are represented on the vertical axis while the time input is measured on the horizon..
q1. a hearing is scheduled for your company to present arguments that your firm has not increased its market power
Sheridon Corporation is investigating automating a process by purchasing a new machine for $519,000 that would have a 6 year useful life and no salvage value. By automating the process, the company would save $135,000 per year in cash operating costs..
What appears to be major constraint that central banks used to determine limits of monetary injections into economy. Did United States use same or different criteria.
Walras Equilibrium with two consumers and two commodities, given endowments and preferences for both consumers.
Newspaper reports frequently suggest that the administration (regardless of who is president) wants the fed to lower interest rates. Why do you think that might be the case?
If a random sample of three South African men were selected at random, what is the probability that the sample mean height is greater than 72 inches? How do you do this two-part question?
Show long run effect on In Phillips curve diagram. If expectations are rational and increase in money growth is announced, what happens to In short run.
q1. walker inc. is trying to determine its price debt. firm has a debt issue outstanding with 15 years to maturity that
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