There are two countries, Home and Foreign. High - skill labour and low - skill labour are the only factors of production. The Home country is high - skill abundant and the Foreign country is low-skill abundant, i. e. H/L > H*/L* where H and H* denote the high - skill workers in the Home and Foreign countries, respectively, and L and L* denote the low- skill workers in the Home and Foreign country, respectively. There are two goods, smartphones and clothes. The production of clothes is intensive in low - skill labour. When smartphones are produced in a single location, their production is intensive in high-skill labour. The production of a smartphone can be split into separate activities. Some of these activities require high skills (R&D, microchips) and some require medium skills ( case, assembly). Depict the effects of free trade on the two graphs that describe the labour market of the Home and the Foreign countries. Does the relative demand for high - skill labour increase or decrease in the Home country? What about the Foreign country? What is the effect of free trade on the relative wage of high skill workers in each country?

There are two countries, Home and Foreign. High - skill labour and low - skill labour are the only factors of production. The Home country is high - skill abundant and the Foreign country is low-skill abundant, i. e. H/L > H/L where H and H* denote the high - skill workers in the Home and Foreign countries, respectively, and L and L* denote the low- skill workers in the Home and Foreign country, respectively. There are two goods, smartphones and clothes. The production of clothes is intensive in low - skill labour. When smartphones are produced in a single location, their production is intensive in high-skill labour. The production of a smartphone can be split into separate activities. Some of these activities require high skills (R&D, microchips) and some require medium skills ( case, assembly). Depict the effects of free trade on the two graphs that describe the labour market of the Home and the Foreign countries. Does the relative demand for high - skill labour increase or decrease in the Home country? What about the Foreign country? What is the effect of free trade on the relative wage of high skill workers in each country?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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