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Econ 335 PRACTICE CHAPTER 4 - (b)Suppose Canada’s...

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Econ 335 Dr. Seck PRACTICE QUESTIONS ON COMPARATIVE ADVANTAGE AND FACTORS ENDOWMENTS ( Handout 2) Suppose that there are three factors: capital, labor, and land. Bread requires inputs of land and labor, and steel requires capital and labor. (a)Which factors are variable and which are specific?
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Unformatted text preview: (b)Suppose Canada’s endowments of land and capital are 10 capital and 100 land, and the U.S.’s are 50 capital and 100 land. Which good does each country export? (c)How does trade affect the returns to land, labor and capital in the U.S. and in Canada?...
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