Exam 5: Resources and Trade: The Heckscher-Ohlin Model

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Suppose Australia, a land (K)-abundant country, and Sri-Lanka, a labor(L)-abundant country, both produce labor and land intensive goods with the same technology. -Using the figure above,demonstrate what happens to the composition of production (that is quantity of cloth per 1 unit of food)in Australia once trade is established between the two countries.Which country will export cloth? What happens to the relative income of workers in Australia as a result of trade? Does it increase or decrease? Would land owners in Australia lobby for or against free trade? Would land owners in Australia lobby for or against free admittance of immigrant workers?

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Question 61

Assume that only two countries, A and B, exist. -Refer to the table above.If you are told that Country B is very much richer than Country A,then the correct answer is

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Question 62

International trade has strong effects on income distributions.Therefore,international trade

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Question 63

If Australia has relatively more land per worker,and Belgium has relatively more capital per worker,then if trade began between these two countries

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Question 64

According to the Heckscher-Ohlin model

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Question 65

Countries do not in fact export the goods the H.O.theory predicts.Discuss.

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Question 66

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Assume that only two countries, A and B, exist. -Refer to the table above.If you are told that Country B is very much richer than Country A,then the correct answer is

International trade has strong effects on income distributions.Therefore,international trade

If Australia has relatively more land per worker,and Belgium has relatively more capital per worker,then if trade began between these two countries

According to the Heckscher-Ohlin model

Countries do not in fact export the goods the H.O.theory predicts.Discuss.

Introduction

National Income Accounting and the Balance of Payments

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,Outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

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