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F07ex2464[1] - You are not allowed to consult any notes or...

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You are not allowed to consult any notes or books. You have to write your answers in the blue book that the persons proctoring the exam give you. Your answers should reflect only your knowledge. Attempting to consult with others or to look at someone else’s work constitutes academic misconduct. Please return this page with your blue book. Econ 464 M. Muniagurria Fall 2007 Exam 2 (80 pts) (I) Heckscher - Ohlin : 2 countries Consider two countries (Japan and Vietnam) that can produce two goods (Airplanes and Clothing) using two factors: production workers (L P ) and non production workers (L N ). The technology to produce each good is the same in either country and allows for substitution among inputs. Clothing production is L P intensive while Airplane production is L N intensive. Japan is relatively L N abundant and Vietnam is relatively L P abundant . Preferences are identical across countries. Answer the following questions. Justify fully using a clear explanation and a diagram and/or an equation in each case. (1) (4 pts) Assume the two countries start trading freely. Draw a
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F07ex2464[1] - You are not allowed to consult any notes or...

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