Y Y A A' X X Nation 1 Nation 2

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 14RQ: What is an externality?
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Question

a.) Looking at these graphs, suppose that the good 'X' is labour-intensive, while 'Y' is capital-intensive. Which nation is relatively more capital abundant? Why?

b.) What is likely to happen to wages in the capital abundant nation when it trades with other nations?

c.) Will the outcome of the above question change if capital was immobile in the nation?

Y
Y
A
A'
X
X
Nation 1
Nation 2
Transcribed Image Text:Y Y A A' X X Nation 1 Nation 2
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