6. Consider our standard mod factors (land and labor). A decrease now oc the short-run and long-run effects on the earnings of employed in the wheat industry? Labor in the cloth industry: Land used in the whe. industry? Land in the cloth industry? /. In shipbuilding there are two types of ships. Producing basic bulk-carrying ships is labor Intensive. Production of complex ships, including the largest container ships and vent deepwater oil-drilling ships, depends more on technical skills and design capabilities both China and South Korea have large shipbuilding industries. China's factor endow ments are shown in Figure 5.3, and comparable data for South Korea, reading across the columns, are 1.8%, 2.6%, 0.7%, 0.1%, 0.1%. 0.0%, and 0.2%. If China exports mostly basic bulk-carrying ships and South Korea exports mostly complex ships, is this pattern consis tent with the Heckscher-Ohlin theory? 8. Indian exports of computer software development services have grown rapidly since the early 2000s. In the early 2000s the cost to employ programmers in India was about half the cost of programmers with comparable skills in the United States. In 2013 the cost in India was about two-thirds the cost in the United States. What trade theory or theories help us to understand the change? 9. In the long run in a perfectly competitive industry, price equals marginal cost and firms earn no economic profits. The following two equations describe this long-run situation for prices and costs, where the numbers indicate the amounts of each input (labor and land) needed to produce a unit of each product (wheat and cloth): Pwheat = 60w + 40r Pcloth = 75w + 25r a. If the price of wheat is initially 100 and the price of cloth is initially 100, what are the values for the wage rate, w, and the rental rate, r? What is the labor cost per unit of wheat output? Per unit of cloth? What is the rental cost per unit of wheat? Per unit of cloth? b. The price of cloth now increases to 120. What are the new values for w and r (after adjustment to the new long-run situation)? c. What is the change in the real wage (purchasing power of labor income) with respect to each good? Is the real wage higher or lower "on average"? What is the change in the real rental rate (purchasing power of land income) with respect to each good? Is the real rental rate higher or lower "on average"? d. Relate your conclusions in part c to the Stolper-Samuelson theorem. You are given the following input cost shFor Each Dollar of Overall Corn Output Vehicle Output National Income Total labor Input $0.60 $0.59 $0.60 Total land Input 0.15 0.06 0.10 Total capital input 0.25 0.35 0.30 $1.00 ET $1.00 $1.00 Suppose that a change in demand conditions in the rest of the world raises the price o corn relative to vehicles, so producers in Pugelovia try to expand production of corn is order to export more corn. a. If all factors are immobile between the corn and vehicle sectors, who gains from thi change? Who loses? b. If all factors are freely mobile between the corn and vehicle sectors, who gains from this change? Who loses? 11. From the following information calculate the total input shares of labor and capital in each dollar of cloth output: For Each Dollar of Cloth Synthetic Fiber Cotton Fiber Output Output Output Direct labor input $0.50 $0.30 $0.60 Direct capital input 0.20 0.70 0.40 Synthetic fiber input 0.10 0.00 0.00 Cotton fiber input 0.20 0.00 0.00 All inputs $1.00 $1.00 $1.00 Cloth is the only product that this country exports. The total input share of labor in prc ducing $1.00 of import substitutes in this country is $0.55, and the total input share o capital is $0.45. Is this trade pattern consistent with the fact that this country is relatively labor-abundant and capital-scarce?lolper-Samuelson theorem. 10. You are given the following input cost shares in the corn and vehicle industries for the country of Pugelovia