Reference no: EM131888595
Topic: International Trade Theory Questions -
Q1. A simple trade model - Consider a model with two countries, Home (H) and Foreign (F). There are two production factors, capital K and labor L.
Both countries have the same endowments: KH = KF = LH = LF = 1.
There are two goods. Consumer preferences are identical across countries and imply
c1/c2 = p1/p2 (1)
where cj denotes the consumption of good j and pj denotes the price of good j. The Home country uses the following production technologies: q1 = K1½L1½, q2 = ½K2½L2½ where qj denotes production of good j and Kj and Lj denote the amount of capital and labor, respectively, used in the production of good j. The Foreign country uses the following production technologies: q1 = ½K1½L1½, q2 = K2½L2½. Production factors are mobile across sectors but immobile across countries. Assume perfect competition. Answer the following questions:
(a) Describe each country's production possibility frontier.
(b) Solve for each country's autarky equilibrium.
(c) Which goods will the country's export under free trade? Provide a brief explanation.
(d) Solve for the free trade equilibrium (i.e. the quantities of each good produced, traded and consumed in each country as well as their relative price).
(e) Now assume that Home is capital abundant: KH = 2, LH = KF = LF = 1. Consider free trade. Discuss the new pattern of production and trade. Compared this model's predictions with those of the Ricardian and Heckscher Ohlin models.
Q2. Patterns of Trade - A country's output vector is X = (2, 2, 1), the world's output vector is XW = (55, 100, 110), the price vector is p = (4, 4, 3) and the commonly used input-output coefficients are
![2171_figure.png](https://secure.expertsmind.com/CMSImages/2171_figure.png)
where the first row describes labor coefficients, the second row describes land coefficients, and the third row describes capital coefficients. All countries have identical homothetic preferences and balanced trade.
(a) Describe the country's pattern of commodity trade.
(b) Describe its pattern of trade in factor content.
(c) What are the equilibrium factor prices?
Please try to answer the questions as clearly as possible showing all steps.
Describe what are the benefits of being a member of the wto
: Describe What are the benefits of being a member of the WTO? What is the WTO, and what is its history? What are the disadvantages? How does it settle disputes?
|
Nominal convertible semi-annually
: A stock is currently selling at 80 per share to yield 10 % nominal convertible semi-annually. The stock is expected to pay dividends at end of each year forever
|
What was the overall advantages of doing the project
: According to businessdictionary's website a GUIDELINE is defined as "Recommended practice that allows some discretion or leeway in its interpretation.
|
Capital budget decisions at central state hospital
: Capital Budget Decisions at Central State Hospital Background and mission of the Hospital The mission of Central State Hospital System
|
Describe the country pattern of commodity trade
: Patterns of Trade - A country's output vector is X = (2, 2, 1), the world's output vector is XW = (55, 100, 110), Describe country pattern of commodity trade
|
Make in the second quarter to return your account
: What rate of return do you need to make in the second quarter to return your account to $1000?
|
Develop a contingency budget for the risk responses selected
: Update your MS Project file to include the Risk Responsibility Plan. Develop a contingency budget for the risk responses selected.
|
Describe leadership traits-behavior and skills
: Describe your leadership traits, behaviors, and skills. What aspects of your leadership character, behaviors, and skills would you like to improve?
|
Earned value management provides a sound basis
: Earned Value Management provides a sound basis for (Select all that apply)? Estimating probable completion times and costs
|