Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Good day, please help me with this exercise 2. This question will ask you to use the specic factor model to analyze a simplied version

Good day, please help me with this exercise

image text in transcribed
2. This question will ask you to use the specic factor model to analyze a simplied version of a liberalization of trade between South Korea and the United States. Assume that there are two goods that people want to buy: kimchi (fermented cabbage) and cars. Assume that there are three production factors: land, capital and labor. Land is specic to kimchi, capital is specic to cars and workers can work in both industries. a) Describe using a graph how workers allocate in autarky between the two sectors in South Korea. Explain your answer. b) Assume that, under autarky, kimchi is cheaper in South Korea than in the US. How does the price of kimchi in South Korea change when South Korea opens up to international trade? Explain your answer. c) Describe using a graph how workers in South Korea reallocate between sectors after South Korea and the US open up to trade with each other. Explain your answer. d) Describe how the real wage of workers and the real returns of land and capital change in South Korea with trade liberalization. Explain your

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_2

Step: 3

blur-text-image_3

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

Principles Of Economics

Authors: Robert H. Frank, Ben Bernanke Professor, Kate Antonovics, Ori Heffetz

6th Edition

0078021855, 9780078021855

More Books

Students also viewed these Economics questions

Question

Evaluate cost-of-shipping alternatives 509

Answered: 1 week ago

Question

8. What are the costs of collecting the information?

Answered: 1 week ago

Question

1. Build trust and share information with others.

Answered: 1 week ago