{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

4431ps2 - ECON 4431V International Trade Spring 2005...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 4431V: International Trade Spring 2005 Problem Set 2 Due March 9th, Wednesday NOTE: All assignments must be typed. Graphs and calculations may be handwritten. No late homeworks will be accepted. Exercise 1 (10 points) Specific Factors Model Use the specification given in Exercise 4 in Problem Set 1. Suppose now that there’s been an inflow of immigrants in the economy and the total labor supply increases from 100 units to 120 units. The supply of capital has not changed. (i) Given the information given, graph the production possibility frontier. (You will not be able to draw the whole PPF with the information given so just show the parts where you can draw.) (ii) Re-do part ( iv ) of Exercise 4 in Problem Set 1. That is, take the relative price as one ( P 2 P 1 = 1) and show graphically the new equilibrium and calculate the new wage rate, new allocation of labor and output in each sector. Exercise 2 (20 points) Specific Factors Model Consider a world with two countries and two produced goods. The production technologies in the two countries are identical: y i 1 = ( l i 1 ) 1 2 ( k i 1 ) 1 2 i = 1 , 2 y i 2 = ( l i 2 ) 1 2 ( t i 2 ) 1 2 i = 1 , 2 Here, the subscripts denote different goods and the superscripts denote different countries. Good 1 uses labor and capital as its inputs while good 2 uses labor and land as its inputs.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern