Unformatted text preview: Explain using Stopler-Samuelson theorem. (10 points) 4. Let us say that capital is specific to the two above industries. If Bangladesh starts trading with Pakistan, what type of capital owners will oppose free trade? How about wage earners? Explain clearly using the specific-factors model (15 points) 5. Let us say that Pakistanis have a strong preference for bicycles, while Bangladeshis have a strong preference for cloth. What will be the pattern of trade? Draw a graph to explain. Is the pattern of trade consistent with the physical definition of capital abundance? How about the relative factor-price definition? (35 points)...
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- Fall '08
- Economics, production possibility frontiers, strong preference, physical definition