Question
Please answer this using Hecksher Ohlin model, Ricardo model , specific factors model , stability model or tariff. is pretty much all we were taught
Please answer this using Hecksher Ohlin model, Ricardo model , specific factors model , stability model or tariff. is pretty much all we were taught in class. If you have another way please first try to get it done with these otherwise please tell me how you solved it
Here's the question :
Suppose that we have the framework described in class with land, labour and capital in the usual allocations. Suppose, however, that capital is in perfectly elastic supply at rental rate r*. Now describe the impact on endogenous factor rewards that are a result of changes in commodity prices and the changes in the stock of labour and land, the factors that are in exogenous supply at home. [Hint: set up the basic price equations and see what you can do before you have to actually solve for anything.]
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