Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help Consider two countries (Home and Foreign) that produce goods 1 (with labour and capital) and 2 (with labour and land) according to the

Please help

image text in transcribed
Consider two countries (Home and Foreign) that produce goods 1 (with labour and capital) and 2 (with labour and land) according to the production functions described in specic factors model. Initially. both countries have the same supply of labour (100 units each), capital and land. The capital stock in Home then grows. This change shifts out both the production curve for good 1 as a function of labour employed and the associated marginal product of labour curve. Nothing happens to the production and marginal product curve for good 2. a. Show how the increase in the supply of capital for Home affects its production possibility frontier. Place good 1 in the horizontal axis. (4 marks) b. If those two economies open up to trade. what will be the pattern of trade (i.e. which country exports which good)? (4 marks) c. Describe how opening up to trade affect all three factors (labour. capital. land) in both countries. (12 marks)

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

Step: 3

blur-text-image

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

Dynamic Business Law

Authors: Nancy Kubasek

1st Edition

0073524913, 9780073524917

More Books

Students also viewed these Economics questions