Consider the specific-factors model with 2 goods: manufacturing and agriculture. Manufacturing requires labour and sector-specific capital, while agriculture requires labour and sector-specific land. Labour is freely mobile across sectors. The government is considering to impose an import tariff on agricultural products. Which of the following is true? (a) The relative price of agricultural products will go down. (b) Capitalists will support this initiative. (c) Agricultural production will increase. (d) Marginal product of labour will decrease in manufacturing. Explain your answer clearly.

Consider the specific-factors model with 2 goods: manufacturing and agriculture. Manufacturing requires labour and sector-specific capital, while agriculture requires labour and sector-specific land. Labour is freely mobile across sectors. The government is considering to impose an import tariff on agricultural products. Which of the following is true? (a) The relative price of agricultural products will go down. (b) Capitalists will support this initiative. (c) Agricultural production will increase. (d) Marginal product of labour will decrease in manufacturing. Explain your answer clearly.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter14: Medical Care Systems Worldwide

Section: Chapter Questions

Problem 7QAP

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Consider the specific-factors model with 2 goods: manufacturing and agriculture. Manufacturing requires labour and sector-specific capital, while agriculture requires labour and sector-specific land. Labour is freely mobile across sectors. The government is considering to impose an import tariff on agricultural products. Which of the following is true? (a)The relative price of agricultural products will go down. (b)Capitalists will support this initiative. (c)Agricultural production will increase. (d)Marginal product of labour will decrease in manufacturing. Explain your answer clearly. Limit your explanation to 200 words.
Suppose China can produce two goods, cloth and food and has three factors of production labor (L), capital (K) and Land (T for terrain). Food is produced using land and labor while cloth is produced using capital and labor, hence, labor is a mobile factor. Keeping in mind the Specific Factors Model, answer the following questions a) What are the production functions for cloth and food? b) Write down the wage equations for each sector and the slope of the production possibility frontier. c) Drive the production possibility frontier for China [hint 4 quarter diagram]
Statement 1 (S1): Complementarities increase the incentives for other agents to take similar actions. Statement 2 (S2): Complementarities occur when agents or sectors, their resources and capacities play respective assigned roles in a coordinated, well planned process of development. * True, True True, False False, True False, False S1: Multiple equilibria is a condition in which more than one equilibrium exists. S2: These equilibria sometimes may be ranked, in the sense that one is preferred over another, but the unaided market will not move the economy to the preferred outcome. * True, True True, False False, True False, False
What does a Production Possibility Frontier for Product X versus Y represent? A) The total combined production of Product X + Product Y for a given set of factors of production B) The trade-off in the level of total production at various output mixes for Product X and Product Y C) The most efficient product production mix for a given set of factors of production D) All of the above
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Figure 2 represents the Texas labor market. In this simplified model, labor and capital are the only factors of production. The initial supply of labor is denoted by S0 and consists entirely of U.S. workers. The demand for labor is denoted by D. Quantity of workers are in thousands and the wage rate is for a 40-hour workweek. (a) At labor market equilibrium, what is total weekly labor income? (b) At labor market equilibrium, what is the weekly income earned by U.S. capital owners? (Note: the capital owners are on the demand side – the demand curve reflects their demand for labor -- so the consumer surplus is the capital owner’s income.) Mexican labor migration yields a new labor supply curve, S1, which is the combination of domestic labor supply and Mexican labor. Given this: (c) What is total weekly labor income?(d) What is the weekly income earned by U.S. capital owners?
MULTIPLE CHOICE (identify the one best answer and provide explanations): Consider an economy in which each worker has one machine and one unit of natural resources. Assume these inputs are fixed, and so is the worker’s human capital. But there has been an improvement in technology. We can surely conclude that productivity has increased if: the amount of goods and services produced from each hour of the worker’s time increases. the amount of goods and services produced by the worker increases relative to a worker in another country. if the amount of goods and services produced by the worker in a given year increases. all of the above. none of the above.
Consider the Grossman-Rossi Hansberg model of offshoring. There are two goods: X and Y. Good X requires 4 units of unskilled labour to do Task 1 and 4 additional units of unskilled labour to do Task 2. Further, 2 units skilled labour is also necessary to organize production of Good X. Good Y requires 2 units of unskilled labour to do Task 1 and 2 additional units of unskilled labour to do Task 2. Besides, 4 units skilled labour is also necessary to organize production of Good Y. The prices of both goods are fixed on world markets at $24 per unit. Initially, all tasks were performed domestically, but now it becomes possible to perform Task 1 in another country (offshoring) for free. (a) What is the wage skilled and unskilled workers receiving before offshoring? Show your work. (b) What is the wage skilled and unskilled workers receiving after offshoring? Show your work.
Consider a specific-factors model where two countries, Denmark and Tanzania, use labor to produce cameras (C) and helicopters (H). However, apertures (A) are a factor specific to cameras, and jerrycans (J) are a factor specific to helicopters. Suppose that labor is freely mobile between both industries. Suppose that by opening up to trade the price of cameras in Tanzania falls by 5%, wages fall by 3%, and the price of helicopters does not change. Use the following information to determine how these affect the rental rates of apertures and jerrycans: Cameras: Sales Revenue 30 Cameras: Labor Payments 20 Cameras: Apertures Payments 10 Helicopters: Sales Revenue 30 Helicopters: Labor Payments 10 Helicopters: Jerrycans Payments 20 In this case, the rental rate to apertures would change by _______ % and the rental rate to jerrycans would change by ______ %. As a result of these changes: A. Owners of apertures are made worse off, and owners of jerrycans are made better off…
Define Static analysis, comparative analysis, and dynamic analysis, also State the main difference among them.
Consider a specific-factors model where two Countries, Denmark and Tanzania, use labor to produce cake (C) and helicopters (H). However, arable land (A) are a factor specific to cake, and jerrycans (J) are a factor specific to helicopters. Suppose that Tanzania has L = 100 workers, J = 40 jerrycans, and A = 1000 arable land. The production functions and marginal products of labor for cake and helicopters are: C = 4 x Lc0.5 x A0.5 MPLc = 2 x Lc-0.5 x A0.5 H = 4 x LH0.5 x J0.5 MPLH = 2 x LH-0.5 x J0.5 In Tanzania, the price of crystals is 20 and the price of hyperdrives is 200. In this case, the wage rate will be ________ and ________ workers will be employed in the cake industry and __________ workers will be employed in the helicopter industry.
The COVID pandemic has changed where many people are able to do their work at the city or metro-area level. Which of the following best describes the predictions from a Rosen-Roback style model on how separating work (in the model, wage) from location of residence might impact house prices across different areas. O. This should put upward pressure on house prices (and population) in traditionally high-wage areas, and downward pressure on house prices (and population) in traditionally high amenity areas. O. This should put downward pressure on house prices (and population) in traditionally high-wage areas, and upward pressure on house prices (and population) in traditionally high amenity areas. O. This should put upward pressure on house prices across all areas, regardless of the initial factors associated with that area. O. This should put downward pressure on house prices across all areas, regardless of the initial factors associated with that area.