I need with questions when you do please explain as well 1. Consider the Specific Factors model with two countries, Home and Foreign, with twogoods, cloth (c) and food (f), and three factors, capital K, labour L and land T.The production functions are given by11F.(Ke, Le) = Kề Lề and F;(Lf, Tf) = LT.That is, capital is specific to cloths and land to food. Suppose that the countries'factor endowments are K"1KF, LH1 and LF1, and TH1 andT = 1/2, so that the total labour force is 1 in both countries. The price of capital isdenoted by r, the price of land by q and the price of labour by w. Denote the goods'prices by p. and pr, and normalise pf = 1 for simplicity.%3DThe demand for cloth and food in country j = H, F is given by x and r';:1Yand r2 p.2where Y denotes aggregate income in country j.(a) Draw or compute the PPFS of Home and Foreign.(b) Derive the autarky equilibrium in Home, showing that L = L" and r" = q".(c) Compute the autarky equilibrium in Foreign and compare equilibrium prices inHome and in Foreign. Explain.(d) With free trade in both goods c and f, which good will Home export, and willcapital owners, land owners and workers each be better off? Explain or compute.

PPF production possibility frontier the locus of points depicting the output mix which a country can…

1. Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cloth (c) and food (f), and three factors, capital K, labour L and land T. The production functions are given by F.(Ke, Le) = Kề Lề and F7(Lf,T;) = LT}.

1. Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cloth (c) and food (f), and three factors, capital K, labour L and land T. The production functions are given by F.(Ke, Le) = Kề Lề and F7(Lf,T;) = LT}.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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