Suppose That a Relatively Capital-Abundant Country Is Exporting the Capital-Intensive

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The Answer is In the specific-factors model, factors of production are not perfectly mobile between industries, unlike in the Heckscher-Ohlin model. This means that the imposition of a tariff on the labor-intensive good will have different effects on the return to labor compared to the Heckscher-Ohlin model.

In this specific-factors model, the relatively capital-abundant country is already exporting the capital-intensive good and importing the labor-intensive good. The imposition of a tariff on the labor-intensive good will likely lead to a decrease in the import of this good, as it becomes more expensive for the country to import. This could potentially lead to a decrease in the demand for labor in the industries producing the labor-intensive good, as they are now facing higher costs due to the tariff.

On the other hand, the industries producing the capital-intensive good may benefit from the tariff, as it could lead to an increase in demand for their product domestically. This could potentially lead to an increase in the return to capital in these industries.

Overall, the imposition of a tariff on the labor-intensive good in a specific-factors model could lead to a decrease in the return to labor in the industries producing this good, while potentially increasing the return to capital in the industries producing the capital-intensive good. However, the specific effects would depend on the specific factors of production and their mobility between industries in the specific-factors model.

Suppose That a Relatively Capital-Abundant Country Is Exporting the Capital-Intensive

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Suppose That a Relatively Capital-Abundant Country Is Exporting the Capital-Intensive

Essay

Correct Answer:Answered by ExamLex AIShow Answer

Correct Answer:
Answered by ExamLex AI