Question
Heckscher-Ohlin Model Consider the following two countries, two goods model. Home and Foreign produce good A and good B with the same technologies. production functions
Heckscher-Ohlin Model
Consider the following two countries, two goods model. Home and Foreign produce good A and good B
with the same technologies. production functions are given as:
QA = L0.5K0.5 (1)
QB = L0.3K0.7 (2)
(a)Which product is capital intensive? Why?
(b)Suppose the following table summarizes the factor endowments of Home and Foreign.Which country is capital abundant and which country is labor abundant?
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Macroeconomics Principles And Policy
Authors: William J. Baumol, Alan S. Blinder
11th Edition
0324586213, 978-0324586213
