Unformatted text preview: ECN 436: International Trade Theory
Professor Manjira Datta Assignment 3: The Specific Factors Model
This is a 20—minute quiz. Total points: 20 Computers are produced using capital and labor, while wheat is produced using land
and labor. Labor freely moves between these two sectors of production in the United
States! However, the marginal product of labor is constant in computer production
while it is diminishing in wheat production. (8 points) Determine how labor is allocated between computer and wheat production in the US. Explain cleariy on a properly iabeled graph. \
: gag-MS, ‘ 0:34 L. 0N result of trade? Explain. \ .
Q It :2) VWLJR :9 “teem“ “AH”; “W
(I. (6 points) How is the U. 8. income distribution affected if the price of wheat increases
due to trade? Explain. ...
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- Fall '09