By using the concept of the Standard Trade Model, and the assumptions of the H-O model. a) Explain with a graph why with the increase in the relative price of Cloth PC/PF then should domestic export Cloth? b) If a country exports Cloth and imports Food, then there is biased growth on cloth, how will it affect the terms of trade? Explain. c) With the same assumptions in number b), what is the impact of export- biased growth and import biased growth of domestic countries on welfare domestic? Explain

By using the concept of the Standard Trade Model, and the assumptions of the H-O model. a) Explain with a graph why with the increase in the relative price of Cloth PC/PF then should domestic export Cloth? b) If a country exports Cloth and imports Food, then there is biased growth on cloth, how will it affect the terms of trade? Explain. c) With the same assumptions in number b), what is the impact of export- biased growth and import biased growth of domestic countries on welfare domestic? Explain

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter21: Economic Development

Section: Chapter Questions

Problem 13PAE

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