Suppose that there are two countries; Country 1 and Country 2. Country 1 is capital abundant and country 2 is labor abundant. X is capital intensive and Y is labor intensive. Assume that Country 1 is a large country and country 2 is a small country. Answer the following question: Now, suppose that Country 2’s labor supply increases. Show the pregrowth and after growth production and consumption points on a figure. Clearly explain how the production and consumption of commodity X and Y would change after growth if we assume that both X and Y are normal goods.

Suppose that there are two countries; Country 1 and Country 2. Country 1 is capital abundant and country 2 is labor abundant. X is capital intensive and Y is labor intensive. Assume that Country 1 is a large country and country 2 is a small country. Answer the following question: Now, suppose that Country 2’s labor supply increases. Show the pregrowth and after growth production and consumption points on a figure. Clearly explain how the production and consumption of commodity X and Y would change after growth if we assume that both X and Y are normal goods.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter21: International Trade And Finance

Section: Chapter Questions

Problem 2SQ

See similar textbooks

Similar questions

Suppose country A has 5000 units of capital and 2000 units of labor while country B has 1000 units of capital and 3000 units of labor: Which country is capital abundant and which one is labor abundant?
Assume that a country with a market economy produces capital goods and consumer goods, use the data that follows to answer the question that follows: Capital Goods Consumer Goods 50 0 40 20 30 35 20 45 10 50 0 51 Does the “law” of increasing opportunity cost apply in the…
Suppose that country A and country B currently have identical production possibility frontiers, but that country A devotes only 5 per cent of its resources producing capital goods over each of the next 10 years, whereas country B devotes 30 per cent. Which country is likely to experience more rapid economic growth in the future? Illustrate using a production possibility frontier graph. Your graph should include production possibility frontiers for country A today and in 10 years, and for country B today and in 10 years.
Suppose country A has 5000 units of capital and 2000 units of labor while country B has 6000 units of capital and 3000 units of labor. which country capital abundant.
Q82 One region has an absolute advantage over another region in the production of good X when... a. The first region has a larger supply of the raw materials required to produce good X. b. An equal quantity of resources can produce more of good X in the first region than in the second region. c. The opportunity cost of one unit of X is lower in the first region than in the second region. d. The first region has a more productive labour force than the second. e. There is no demand for good X in the second region
Suppose Country A can create 200 tons of capital-intensive goods or 200 tons of labor-intensive goods in one day. Suppose Country B can produce 80 tons of capital-intensive goods or 160 tons of labor-intensive goods in one day. Country A or B has the absolute advantage in the production of capital-intensive goods. Country A or B has the absolute advantage in the production of labor-intensive goods Country A or B has the comparative advantage in the production of capital-intensive goods. Country A or B has the comparative advantage in the production of labor-intensive goods.
For the closed economy: -Draw the production possibilities curves for Italy and Spain by explaining them separately. - in Spain in the case of a closed economy and The price of white scarves (in terms of red scarves) in Italy what? - Which country is absolute in the production of which color scarf has the upper hand? Explain in detail. - Which country should be compared in the production of which color scarf? has the upper hand? Explain in detail. - When countries open up, what color scarf each is exported? will?
Suppose labor and capital are the only two factors of production. If Malaysia has 3% of the world’s capital resources and 1% of the world’s income, then Malaysia would be considered a. relatively more abundant in the land b. an emerging market economy c. a capital-abundant country d. a labor-abundant country
Suppose that there are two countries; Country 1 and Country 2. Country 1 is capital abundant and country 2 is labor abundant. X is capital intensive and Y is labor intensive. Assume that Country 1 is a large country and country 2 is a small country. Answer the following question: What happens to the terms of trade of Country 1, terms of trade of Country 2, welfare of country 1 and country 2 when Country 1’s capital stock increases?
Imagine two societies A and B with the production possibility curve shown in the diagram. In year t Society A produces only capital goods and Society B only butter In year t + 1 they both produce only butter. Which of the following describes both societies in year t + 1? A) A has a larger capital stock and A produces more butter. B) Both have the same capital stock but A produces more butter. C) Both have the same capital stock and both produce the same amount of butter. D) A has a larger capital stock but B produces more butter.
Points A and B on the Combined graph represent Malaysia's and Canada's production, and the red point shows the combined production of the two countries. Which of the following is a correct interpretation of points A and B? multiple choice 1Each country is using all of its resources.Malaysia is using a higher percentage of resources than Canada.Canada is using a higher percentage of resources than Malaysia.Both countries have unused resources that could increase production without a tradeoff.
Consider two countries, Zerka and Xena. In Zerka total annual output is worth $500 million and people work 40 million hours. In Xena total annual output is worth $600 million and people work 50 million hours. A) From the information above, in which country is productivity higher? B) Economists use the term ______________________________ to refer to the ability to produce a good using fewer inputs than another producer. C) Economists use the term ______________________________ to refer to the ability to produce a good at a lower opportunity cost than another producer.