Pecific factor model, Canada and Mexico. Suppose that

Pecific factor model

Assignment Help Business Economics

Reference no: EM131006486

PECIFIC FACTOR MODEL

Canada and Mexico. Suppose that Canada and Mexico produce two goods: timber and televisions. Assume that land is specific to timber, capital is specific to televisions, and labor is free to move between the two industries. When Canada and Mexico engage in free trade, the relative price of television falls in Canada and the relative price of timber falls in Mexico.

A) Considering these changes in relative prices, what product does Canada export? What product does Mexico export?

B) In a graph representing the equilibrium of the labor market in Canada, show how the wage changes due to the fall in the price of television, while holding constant the price of timber. How does the nominal wage change in Canada? How does the real wage in terms of both goods change?

C) What is the impact of opening trade on the rentals on capital and land in Canada? Can we predict the change in the real rentals on capitals and lands? And in Mexico?

D) In each country, has the specific factor in the EXPORT industry gained or lost and has the specific factor in the IMPORT industry gained or lost?

Reference no: EM131006486

Questions Cloud

How diversity in socioeconomic status is measured : Review studies of health disparities driven by socioeconomic status. Identify the current ideas about how diversity in socioeconomic status is measured, what the different predictors of health are, gaps in current knowledge, and priorities for fut..

Shadow pricing is an important concept : Shadow pricing is an important concept in that it involves unknown or difficult to calculate costs. This creates a range in the pricing. For example, think about amortized costs versus actual costs. How would this affect shadow pricing?

Statements are true about inflation : Which of the following statements are true about inflation?

The cash market price of the lathe was unknown : Prepare the journal entries to record (a) interest for each of the three years and (b) payment of the note at maturity.

Pecific factor model : Canada and Mexico. Suppose that Canada and Mexico produce two goods: timber and televisions. Assume that land is specific to timber, capital is specific to televisions, and labor is free to move between the two industries. Considering these changes i..

The first demand-side elasticity discussed in class : The first demand-side elasticity discussed in class and the readings was the price elasticity of demand (ED). It is defined as the

Determine the socially optimal level of production : Consider a hypothetical market for paper. you are given the following demand, supply and MEC curves: P=100-Q MC=1/4Q MEC=10 Draw a diagram that shows the privately and socially optimal outcomes. Determine the socially optimal level of production and ..

Expected net cash flows : What is each project’s IRR? If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice? What is each project’s MIRR at the cost of capital of 10%? At 17%?..

Characteristics of proper or improper medical training : Prepare a two- to three-page paper discussing your views on whether today's doctors exhibit characteristics of proper or improper medical training

User Account

All Pages