Discuss the welfare effects of a drop in the relative price

Assignment Help International Economics

Reference no: EM131289803

Consider a model of two stylized countries, called Germany and China. Germany is an advanced economy with a long tradition of manufacturing highquality goods. China is less developed, but has become the world's secondlargest economy by focusing on exporting manufactured goods. Imagine that Germany and China produce only two goods: machine tools (such as precision cutting tools for a car factory) and consumer electronics (like MP3 players, personal computers and TVs). Furthermore, assume that Germany has an absolute advantage in producing both goods, and a comparative advantage in producing machine tools. In the framework of the HeckscherOhlin model discuss the welfare effects of a drop in the relative price of consumer electronics in China.

Reference no: EM131289803

Questions Cloud

Research a food scandal in your own country : Research a food scandal in your own country. What impact did it have on demand? What was the government reaction? Did the suppliers suffer?

Why do companies hedge foreign exchange risk : Why do companies hedge foreign exchange risk? What are the differences between a forward contract and a foreign currency option? What term is used for an option with a positive intrinsic value? What is the concept underlying the two-transaction persp..

Advantage of an instant manufacturers rebate : Many car dealerships advertise that they will finance your purchase at low interest rate or you can take advantage of an instant manufacturers rebate. Assume you are in this dilemma, you found the perfect car for $20,000. You have a plan to pay off t..

Analyzing and interpreting pension disclosure : Analyzing and Interpreting Pension Disclosure-Expenses and Returns Stanley Black & Decker, INC. discloses the following pension footnote in its 10-K report. Explain, in general, how expected return on plan assets affects reported pension expense. How..

Discuss the welfare effects of a drop in the relative price : In the framework of the HeckscherOhlin model discuss the welfare effects of a drop in the relative price of consumer electronics in China.

What information did you gather from the docket : What information did you gather from the docket?On what occasion might you utilize a site like this when you are working at a law firm?

Entrepreneurship-creativity and innovation : The project is a tourism project primarily aims to encourage and promote domestic tourism by providing all camping gears and make them available to the public at reasonable prices.

What is the chi square value for the given scenario : What is the chi square value for this scenario? Use the answer to b and the =chidist() equation in Excel to find p value. Is there a relationship between days of the week and the number of employees who are sick on that day?

How should marketers respond to the changing environment : Compare and contrast core beliefs/values and secondary beliefs/values. Provide an example of each and discuss the potential impact marketers have on each.

User Account

All Pages