How does opening to trade affect the relative price

Assignment Help Microeconomics

Reference no: EM133287656

Consider a Heckscher- Ohlin model with two countries, Home and Foreign, two goods, tomatoes and wheat, and two factors of production, labor and land. Countries have identical technologies, so that a unit of tomatoes takes 10 hours of labor and 5 acres of land, and a unit of wheat takes 4 hours of labor and 8 acres of land. Assume Home has 100 hours of labor and 80 acres of land, while Foreign has 60 hours of labor and 40 acres of land.

How does opening to trade affect the relative price of wheat in Home?

Show graphically that both Home and Foreign get more consumption under free trade than under autarky.

Reference no: EM133287656

Questions Cloud

What are the most important aspects of e-government : Introduction: In your view, what are the most important aspects of E-Government/ Digital Government

List the three main approaches to database programming : Question - List the three main approaches to database programming. What are the advantages and disadvantages of each approach

How would you defend your argument : Select an argument for or against either euthanasia or physician-assisted suicide. How would you defend your argument

Evaluate the role of gdp as a measure of economic growth : Explain how high taxes may contribute to the deterioration of economic activity and high unemployment rates in South Africa

How does opening to trade affect the relative price : How does opening to trade affect the relative price of wheat in Home? Show graphically that both Home and Foreign get more consumption under free trade

List a couple of characteristics : Team Work Experiences Discussion - List a couple of characteristics, qualities, and/or factors that contributed to the team being successful or a failure

Which of those did you quantify before acting : In which cases might you have saved yourself some resources if you would have used what you are learning this week to quantify the situation

Propose an appropriate marketing communications mix : Propose an appropriate marketing communications mix for achieving the campaign objectives you have outlined in (a) above. Explain how the Marketing Manager

Are functional strategies interdependent of other functions : Question - Are functional strategies interdependent, or can they be formulated independently of other functions

User Account

All Pages