Which country will export the goods

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Reference no: EM132208434

Question: Greece is a country where the wages of the skilled workforce are relatively higher, compared with the wages of skilled workers in Germany and in Germany, the wages of unskilled workers are relatively higher compared with Greece. Assume there is no capital or labor mobility between Germany and Greece. However, Greece and Germany are trading openly.

a) Assume after the economic crises, Greece had increased the tariff rates, which decreased the trade between Germany and Greece significantly. How would this affect the wage and supply of the skilled labor relative to unskilled labor in Germany and Greece, both in the short run and in the long run?

b) Which country will export the goods that require relatively more skilled labor, which country will export the goods that require relatively more unskilled labor?

Reference no: EM132208434

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