Question
There are 2 commodities (beef and cars), 2 specific factors (land and capital) and one mobile factor (labor). The production of beef (qB) uses land
There are 2 commodities (beef and cars), 2 specific factors (land and capital) and one mobile factor (labor). The production of beef (qB) uses land (T) and labor (LB), while the production of cars (qC) uses capital (K) and labor (LC). Assume the country of Japania is a "small" country relatively well endowed with capital.
Effects of the movement from Free Trade to Autarky for Japania. Assume Japania suddenly stops trading because of a pandemic
1. Welfare Changes for landowners. Are they better off, worse off or neither when the country moves from Free Trade to Autarky? Use precise explanations.
2. Welfare Changes for capital owners. Are they better off, worse off or neither when the country moves from Free Trade to Autarky? Use precise explanations
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