Specific factors of international trade, International Economics

Assignment Help:

Q. The Specific Factors model makes a distinction between general-purpose factors that can move between sectors and factors that are specific to particular uses. How do differences in the availabilities of the specific factors form the basis for international trade? Identify factors, which are specific, and explain in what sense or context they are specific.

Answer: This model posits a nil elasticity of technical substitution of a "specific" factor" among the two products. Therefore if the supply of one of these is (relatively) small, after that the marginal product of labour in that industry will be low. Since every country is producing some of each, the wage rate have to be equal in both sectors. Therefore, the country will not be capable of produce and sell the product competitively. An illustration of a specific factor might be an engineer trained to operate and maintain a certain type of machine or land which can be used to raise only one type of crop.


Related Discussions:- Specific factors of international trade

Explains the sharply divergent long-run growth patterns, Q. What ex...

Q. What explains the sharply divergent long-run growth patterns? Answer: It lies in the political and economic features of developing countries and the way these have

calculate the gross and net national product, Given the following hypothet...

Given the following hypothetical data (in millions of naira): 1.    gross private domestic investment        N59 2.    contributors for social insurance           N8 3.    inter

Unrealized gains from trade, Q. Explain why large interest rate differences...

Q. Explain why large interest rate differences would be strong evidence of unrealized gains from trade. Answer: The difference between offshore and onshore interest rates on

Explain effects of permanent increase in u.s. money supply, Explain the eff...

Explain the effects of a permanent increase in the U.S. money supply in the short run and in the long run.  Assume that the U.S. real national income is constant. A raise in th

How much steel could the firm sell domestically, Q . While selling exports...

Q . While selling exports it could also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel could the firm sell

Extensive import-substitution industrialization, Q. The United States, as ...

Q. The United States, as it began its long and unbeaten growth in the early 19th Century, consciously promoted domestic production through such activities as tariffs, Clay's Ameri

Scope, what is scope of international economics

what is scope of international economics

INTERNATIONAL MEASUREMENT FOR ECONOMIC DEVELOPMENT, WHAT ARE THE ROLES OF F...

WHAT ARE THE ROLES OF FOREIGN TRADE IN ECONOMIC DEVELOPMENT

Trade barriers, why do nations impose trade barriers

why do nations impose trade barriers

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd