Suppose Indonesia and Canada trade in sarongs and beer. Use the following data for Canada to answer

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Suppose Indonesia and Canada trade in sarongs and beer. Use the following data for Canada to answer the questions:

a. Which industry is labor-intensive?

b. Give the percentage change in the rental on capital.

c. Compare the magnitude of the percentage in the rental on capital in part (b) with that of labor.

d. Identify the factor that benefits from trade in real terms. Which factor loses?

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International Economics

ISBN: 9781319218508

5th Edition

Authors: Robert C. Feenstra, Alan M. Taylor

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Question Posted: Jan 02, 2023 03:19 AM

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Suppose Indonesia and Canada trade in sarongs and beer. Use the following data for Canada to answer

Question:

Sarongs: Beer: Sales revenue = Ps Qs = $100 Earnings of labor = W.Ls = $80 Payments to capital = R. K = $40 Percentage increase in the price = AP/P = 25% Sales revenue = P Q = $80 Payments to labor = W.Lg= $30 Payments to capital = R.K = $60 Percentage increase in the price = APg/Pg = 0%

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a b c The percentage change in the rental of capit...View the full answer

International Economics

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