Question
Consider the H-O model studied in class (all the standard assumptions hold). There are 2 commodities (garments and trucks) and 2 mobile factors (labor and
Consider the H-O model studied in class (all the standard assumptions hold). There are 2 commodities (garments and trucks) and 2 mobile factors (labor and capital). The production of garments (qG) is labor intensive while the production of trucks (qT) is capital intensive. Assume the country of Japania is a "small" country relatively well endowed with capital. Use complete explanations/diagrams to answer the questions below.
(Autarky)
Draw a diagram for Japania and identify a plausible autarky point and price ratio (use the horizontal axis for trucks).
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