Please help me with these questions. Thank you!
Dothrakia and Braavos There are two countries on a continent, Dothrakia and Braavos. The only products these countries produce are boots and shirts. Consider only two factors of production: labor and capital. Compared to boots, shirts are capital intensive (they require looms to make the cloth, Whereas boots are made from leather that can be dried in the sun). Dothrakia is a primitive, rural society where only a few families have a loom. Braavos is an advanced, urban society with many factories and the continent's only bank. The two countries have similar size populations. 1. Based on this description, what do you think are the relative factor endowments? 9999's Dothrakia is labor and capital abundant; Braavos is labor and capital scarce Braavos is labor and capital abundant; Dothrakia is labor and capital scarce Dothrakia is labor abundant and capital scarce; Braavos is capital abundant and labor scarce Dothrakia is capital abundant and labor scarce; Braavos is labor abundant and capital scarce Braavos and Dothrakia are both labor abundant and capital scarce If there is NO TRADE, where do you think labor will earn higher earnings relative to capital owners (compared to the other country)? And where Will capital earn more relative to labor (compared to the other country)? a. b. Labor Will earn more relative to capital in Dothrakia, and capital will earn more relative to labor in Braavos Labor will earn more relative to capital in Braavos, and capital will earn more relative to labor in Dothrakia Labor will earn more relative to capital and capital will earn more relative to labor in Braavos. Labor will earn more relative to capital and capital will earn more relative to labor in Dothrakia. 3. According to Hecksher-Ohlin, which country will export which products if the countries decide to trade? Braavos will export boots and shirts Dothrakia will export boots and shirts Braavos will export boots; Dothrakia will export shirts Braavos will export shirts; Dothrakia will export boots These two countries would not trade 9999's 4. Assume that workers can easily move between making boots and shirts, and tools (and other capital goods) can also be used easily for making boots and shirts. According to Stolper Samuelson, who will see increased earnings from trade (compared to no trade)? Braavos workers will earn higher wages; Dothraki capital owners will receive higher prots Braavos capital owners will receive higher prots: Dothraki workers will earn higher wages Braavos capital owners and workers will receive higher earnings Dothraki capital owners and workers will receive higher earnings P'F'P'P' 5. Assume that workers specialize in boots and shirts and cannot make products they do not specialize in; similarly, assume tools (and other capital goods) can only be used for making boots or shirts. Who will be pro-trade in each country? a. All Braavos workers and Braavos capital owners b. Braavos capital owners and Dothraki workers c. Braavos boot makers (capital & labor) and Dothraki shirt makers (capital and labor) d. Braavos shirt makers (capital & labor) and Dothraki boot makers (capital & labor) e. Dothraki capital owners and Braavos workers
