Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Consider a 2-country world with many goods and labour as the only factor of production, where the US have an absolute technological advantage relative

image text in transcribed
image text in transcribed
1. Consider a 2-country world with many goods and labour as the only factor of production, where the US have an absolute technological advantage relative to India in the production of all goods, except for one, for which productivity is the same in both countries. Assume that India experiences technological catch-up. Then: (a) Indian relative wage falls, the US enjoy a welfare gain and India a welfare loss (b) India relative wage increases but remains lower than one (1), and welfare increases in both countries (c) Indian relative wage equals one (1), welfare increases in India and falls in the US (d) Indian relative wage increases above one (1), welfare increases in India and falls in the US [10 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Christopher T.S. Ragan, Richard G Lipsey

14th canadian Edition

321866347, 978-0321866349

More Books

Students also viewed these Economics questions

Question

Differentiate between dry and wet clutches.

Answered: 1 week ago

Question

2. How do I perform this role?

Answered: 1 week ago