The figure to the right illustrates the causes and effects of international labor mobility between two countries, Home and Foreign (*). The horizontal axis represents the total world labor force. The workers employed in Home are measured from the left, the workers employed in Foreign from the right. The left vertical axis shows the marginal product of labor in Home; the right vertical axis shows the marginal product of labor in Foreign. Suppose the initial allocation of labor has OL³ workers in Home and 0*L³ workers in Foreign. Given this initial allocation, labor can be expected to O A. migrate from Home to Foreign. O B. remain situated where it currently resides. OC. migrate from Foreign to Home. OD. migrate toward the higher nominal wage. From the perspective of the world economy, this migration of labor is desirable since O A. total world output rises by BAC. OB. total world output rises by L²L³DA. OC. total world output rises by DAE. O D. Foreign rids itself of disgruntled workers. MPL D E B MPL 0 Home employment L³ L²L¹ Foreign - Total world labor force 0 employment Q

The figure to the right illustrates the causes and effects of international labor mobility between two countries, Home and Foreign (). The horizontal axis represents the total world labor force. The workers employed in Home are measured from the left, the workers employed in Foreign from the right. The left vertical axis shows the marginal product of labor in Home; the right vertical axis shows the marginal product of labor in Foreign. Suppose the initial allocation of labor has OL³ workers in Home and 0L³ workers in Foreign. Given this initial allocation, labor can be expected to O A. migrate from Home to Foreign. O B. remain situated where it currently resides. OC. migrate from Foreign to Home. OD. migrate toward the higher nominal wage. From the perspective of the world economy, this migration of labor is desirable since O A. total world output rises by BAC. OB. total world output rises by L²L³DA. OC. total world output rises by DAE. O D. Foreign rids itself of disgruntled workers. MPL D E B MPL 0 Home employment L³ L²L¹ Foreign - Total world labor force 0 employment Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose there are two countries Peru and Japan that produces 7,523 units ofFood or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5,000. a) On two seperate graphs sketch the initial PFF for the two countries with Food on the x-axis. b) If Japan and Peru employ half it workers to produce Fuel how much each good can consume? Label this point A and A* respectively. c) Which country has the absolute advantage in food? In fuel? Explain. d) Which country has the comparative advantage in food? In fuel? Explain. e) Which good(s) should each country specialized in?
In the specific factor model, suppose that Nation 1 and Nation 2 have identical labor endowments, and identical capital in production of good Y, but nation 1 has more capital in the production of good 1. Technologies and tastes are the same across both nations. Can we predicts the trade pattern between countries? What factors(s) in Nation 1 benefits from the opening of trade, and which factor(s) loses?
Consider a two country, two goods, single factor model with Öxed labor requirements. If a country A has an absolute advantage in both goods over country B, there cannot be a international trade between them. 1. true 2. false
Q:1 A. Explain the reason ( s ) why the equalization of relative factor prices is a result of trade . B. How can a country benefit economically from both importing and exporting the same product , such as automobiles , machinery ?
In the Heckscher-Ohlin model with trade the wage in a country that produces both goods will depend on its labour abundance. True False
Suppose a country which produces only agricultural goods and electronic goods. Both goods use capital and labour as production inputs, however, the agricultural goods are assumed to be more labour-intensive. On three separate graphs, draw the “original” production possibility boundary (electronic goods on the horizontal axis, agricultural goods on the vertical axis) and illustrate each of the following situations: a. the country observes large increases in immigration; b. there is a technological improvement in the production of military goods only;c. a neighbouring country threatens to invade and the country responds by devoting more resources to military goods.
(Parts a-c) Assume two countries, Gisslovia and Gerardania, both have 1200 units of labor that can be used to produce food or clothing. In Gisslovia it takes 4 units of labor to produce one unit of food and 3 units of labor to produce one unit of clothing. In Geradania it takes 3 units of labor to produce one unit of food and 2 units of labor to produce one unit of clothing. a) If each country allocated one-half of its labor to food production how much food would be produced? b) If each country allocated one-half of its labor to clothing production how much clothing would be produced? c) Suppose Gisslovia only produced food. If Gerardania produced enough food to keep the total amount equal to part a, how much clothing would they produce?
According to the Heckscher-Ohlin model, free trade would lead to an equalization of wage rate internationally. Explain why we do not observe that result in the real world, where, for instance, there is great discrepancy in wage rate between developed and developing countries
Consider an economy with two countries and two goods. Unit labor requirement for each product is given in the table below. Domestic Foreign Apple 1 4 Orange 2 1 Available Labor 1,000 7,000 Suppose that Domestic and Foreign can trade apple in exchange for orange at 1-to-1 ratio. Assume that consumers also prefer consuming at one apple for every orange. Calculate the increase in consumption of orange in Foreign after trade opens. Report your answer in 3-decimal precision. Ex: If your answer is 666.54634654674, then 666.546.
Introducing free international trade in the specific factor model expands the set of feasible allocations in the world economy. True False
Using the Heckscher-Ohlin model with two countries, trade will A increase the skilled-unskilled wage gap in the skill abundant country and decrease it in the other country B decrease the skilled-unskilled wage gap in the skill abundant country and increase it in the other country C increase the skilled-unskilled wage gap in both countries D decrease the skilled-unskilled wage gap in both countries E not change the skilled-unskilled wage gap at in at least one country
Suppose the Heckscher-Ohlin model was modified to allow for technology differences to exist between two trading countries. How would this change the Heckscher-Ohlin model's findings on factor prices, goods prices, and the gains from trade for each factor/industry over time? Also, explain how you would determine which good a country would import and which good a country would export.