Q1. The notion of factor intensity refers to...
A the system of law and regulations adopted by a country
B the quantities of productive resources possessed by a country
C the technology possessed by a country
D the amount of labor per unit of capital used in production of a product
Q2. a Country is relatively abundant in Capital if...
A if it value of capital is higher than in the rest of the world
B The ratio of capital to labor (K/L) is relatively higher than in another country
C The ratio of labor to capital (L/K) is relatively higher than in another country
D The amount of capital required to produce one good is high
Q1. The notion of factor intensity refers to...
A the system of law and regulations adopted by a country
B the quantities of productive resources possessed by a country
C the technology possessed by a country
D the amount of labor per unit of capital used in production of a product
Q2. a Country is relatively abundant in Capital if...
A if it value of capital is higher than in the rest of the world
B The ratio of capital to labor (K/L) is relatively higher than in another country
C The ratio of labor to capital (L/K) is relatively higher than in another country
D The amount of capital required to produce one good is high
Related textbook solutions
Related questions
Draw the graph carefully. Please use one graph per country and show both the autarky and the free trade equilibrium on each graph.
Consider the following data on the factor endowments of two countries A and B:
|
Countries |
||
|
Factor Endowments |
A |
B |
|
Labor force: L |
100 workers |
50 workers |
|
Capital Stock: K |
60 machines |
10 machines |
a. Which country is relatively capital abundant? Which country is relatively labor abundant? Explain (calculate the ratios).
b. Supposing that cars are capital intensive relative to shoes, which country will have a comparative advantage in the production of cars? Of shoes? Explain.
c. Graphically demonstrate the pre-trade and post-trade equilibrium between these two countries (production and consumption points). Draw a Demand Diagonal. Find and label the trade triangles for each country.
d. Which factor gains and which factor loses when trade arises between these two countries? Explain precisely.
1. The capital stock in India is $22 trillion, and the labor force is 511 million people. The capital stock in Sri Lanka is $584 billion, and the labor force is 8 million people. Which country is relatively capital abundant?
A.India.
B.Sri Lanka
2. The capital to labor ratio in steel production in India and Sri Lanka is higher than the capital to labor ratio in textile production in both countries. We can say that the steel industry is
A.relatively capital abundant in both countries.
B.relatively capital intensive in both countries.
C.has a comparative advantage over the textile industry.
D.has an absolute advantage over the textile industry.
3. Using the data from the previous two problems, and assuming that the only two countries in the world are Sri Lanka and India, the Heckscher-Ohlin Theorem predicts that ________ , and the Stolper Samuelson Theorem predicts that _____________.
| A. |
India will export steel; labor in India will benefit from trade. |
|
| B. |
Sri Lanka will export steel; labor in Sri Lanka will benefit from trade. |
|
| C. |
India will export steel; capital owners in India will benefit from trade. |
|
| D. |
Sri Lanka will export steel; capital owners in Sri Lanka will benefit from trade. |
