assign3_0910

assign3_0910 - University of Hong Kong 2nd semester...

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

View Full Document Right Arrow Icon
University of Hong Kong 2 nd semester 2009-2010 ECON0301 Theory of International Trade Assignment 3 Y. Stephen Chiu Due time: 5pm, 12 March 2010 (Friday) Answer all of the following questions, and hand in your scripts to your TA (Mr. DAI Ming) on or before the deadline via his pageon box on the 9 th floor of K.K. Leung Building. 1. (Ricardian model) Consider a many good Ricardian model as follows. There are 5 goods: 1, 2, 3, 4, and 5. Their unit labor requirements in home and foreign countries are as follows: Good Home Unit Labor Requirement (a i ) Foreign Unit Labor Requirement (a i *) Relative Home Productivity Advantage (a i */a i ) 1 1 10 10 2 5 40 8 3 3 12 4 4 6 12 2 5 12 9 0.75 Let L and L* be 100 and 150, respectively. Suppose each country always spends1/5 of its income on each good. (This comes from the utility maximization problem when the utility function is Cobb-Douglas, i.e., u= x 1 0.2 x 2 0.2 x 3 0.2 x 4 0.2 x 5 0.2 .) a. Write down the relative supply of home labor over foreign labor (as a function of
Background image of page 1

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

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

This note was uploaded on 02/23/2011 for the course ECON 301 taught by Professor S.chiu during the Spring '11 term at HKU.

Page1 / 2

assign3_0910 - University of Hong Kong 2nd semester...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online