Question

Starting from the long-run equilibrium without trade in the monopolistic competition model, as illustrated in Figure 6-5, consider what happens when the Home country begins trading with two other identical countries. Because the countries are all the same, the number

Question

In this question, we use the Rybczynski theorem to review the derivation of the Heckscher-Ohlin theorem.
a. Start at the no-trade equilibrium point A on the Home PPF in Figure 4-2, panel (a). Suppose that through immigration, the amount

Question

Suppose that computers use 2 units of capital for each worker, so that KC = 2 ?¢ LC, whereas shoes use 0.5 units of capital for each worker, so that KS = 0.5 ?¢ LS. There are 100 workers and

Question

In the short-run specific-factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops.
a. Redraw panel (a) of Figure 5-11 starting from the

Question

Consider an increase in the supply of labor due to immigration, and use the long-run model. Figure 5-8 shows the box diagram and the leftward shift of the origin for the shoe industry. Redraw this diagram, but instead, shift to

Question

In Table 5-2, we show the growth in the real rental and real wages in Singapore, along with the implied productivity growth. One way to calculate the productivity growth is to take the average of the growth in the real

Question

In Figure 4-3, we show how the movement from the no-trade equilibrium point
A to a trade equilibrium at a higher relative price of computers leads to an upward sloping export supply, from points A to D in panel

Question

Suppose that there are drastic technological improvements in shoe production at Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country:
Computers: Sales revenue = PCQC = 100

Question

Use the following information to answer the questions below:
Manufacturing: Sales revenue = PM • QM = 150
Payments to labor = W • LM = 100
Payments to capital = RK • K = 50

Question

Starting from equilibrium in the specific-factors model, suppose the price of manufactured goods falls so that wages fall from W´ to W in Figure 3-5.
a. Show that the percentage fall in the wage is less than the percentage