Exercise 4

1.Explain the Specific Factors Model briefly.

2.How Specific Factors Model different from the Ricardian Model? Explain briefly.

3.With help of a diagram, explain the impact of decrease in 1 product only. With example (products etc as assumptions) to explain the impact.

(Example: Using the diagram, find the reduction effect for 1 item only. For example, why there is a decrease in the unit of sugar in beverages.)

4.By providing an example and with the help of a diagram, explain the impact of start allowing free labor migration between 2 countries.