Assume the following: Good X is produced using 2 units of capital, 1 units of labor, and 2 units of land. Good Y is produced using 3 units of capital, 4 units of labor, and 1 unit of land. The United States exports 10X and 20Y. The United States imports 5X and 25Y. The United States owns 20% of the world's capital and land. The United States has 10% of the world's labor force. The GDP for the United States was 15% of world output. Answer the following: a) Calculate the net exports (or imports) of each factor using the factor content of trade approach. b) Describe how you can determine factor abundance for the United States in the above model. Calculate/explain factor abundance for the United States using the above data. Describe how and why you would conduct an empirical test to see if the H-O Theorem holds for the United States (in words, 3-4 sentences). c) d) Conduct an H-O Sign test using the above data. Explain your results. Are they consistent with the H-O Theorem? Why?
Assume the following: Good X is produced using 2 units of capital, 1 units of labor, and 2 units of land. Good Y is produced using 3 units of capital, 4 units of labor, and 1 unit of land. The United States exports 10X and 20Y. The United States imports 5X and 25Y. The United States owns 20% of the world's capital and land. The United States has 10% of the world's labor force. The GDP for the United States was 15% of world output. Answer the following: a) Calculate the net exports (or imports) of each factor using the factor content of trade approach. b) Describe how you can determine factor abundance for the United States in the above model. Calculate/explain factor abundance for the United States using the above data. Describe how and why you would conduct an empirical test to see if the H-O Theorem holds for the United States (in words, 3-4 sentences). c) d) Conduct an H-O Sign test using the above data. Explain your results. Are they consistent with the H-O Theorem? Why?
Chapter21: International Trade And Finance
Section: Chapter Questions
Problem 2SQ
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