In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter21: International Trade And Finance
Section: Chapter Questions
Problem 16SQ
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In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then

 

  1. Both owners of K and owners of A will benefit.
  2. Owners of A will benefit.
  3. Owners of K will benefit.
  4. Neither owners of K nor owners of A will benefit.

 

Explain your answer in up to 200 words and using a diagram

 

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