Assume that in an economy in equilibrium computers are produced using 1000 units of capital and 500 workers.Similarly, shoes are produced using 400 units of capital and 400 workers.Which industry is capital-intensive and which industry is labor-intensive?

A.

The shoe industry is both capital-intensive and labor-intensive.

B.

The computer industry is labor-intensive and the shoe industry is capital-intensive.

C.

The computer industry is capital-intensive and the shoe industry is labor-intensive.

D.

The computer industry is both capital-intensive and labor-intensive.

From the numbers in the previous question, we can conclude that the country in question has 1400 units of capital and 900 workers.Assume that this country opens up to trade with another country that uses a similar technology to produce computers and shoes, but has 4000 units of capital and 2000 workers.What will the first country export and import?

A.

The country will export both shoes and computers.

B.

The country will export computers and import shoes.

C.

The country will export shoes and import computers.

D.

The country will import both shoes and computers.

What will happen to the real wage and the real return on capital in the first country from the problems above when it opens up to trade?

A.

The real wage and the real return on capital will increase.

B.

The real wage will increase and the real return on capital will decrease.

C.

The real wage will decrease and the real return on capital will increase.

D.

The real wage and the real return on capital will decrease.

Leontiefmade many simplifying assumptions in his analysis of the U.S. factor content of trade in the 1940s.Which assumption do most contemporary economists believe is the primary driver that led tohis "paradox"?

A.

Leontief assumed that the U.S.'s trading partners used the same production technologies as the U.S.

B.

Leontief only assumed two factors of production