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Unformatted text preview: also earn more than Foreign workers in terms of televisions. 6. Why do some low‐wage countries, such as China, pose a threat to manufacturers in industrial countries, such as the United States, whereas other low‐wage countries, such as Haiti, do not? Answer: To engage in international trade, a country must have a minimal threshold of productivity. Countries such as China have the productivity necessary to compete successfully, but Haiti does not. The following problems are from Chapter 2 of the Textbook. ECON 6032 International Trade and Foreign Direct Investment Prof. Larry Qiu Consider the following model of trade between Iceland and Finland. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: fish and wheat. Consumers always spend one fifth of their income on fish and the remainder on wheat. The only factor of production is labor. Each Iceland worker can produce 1 unit of fish or 1 unit of wheat per unit of time, while each Finland worker can produce 2 units of fish or 4 units of wheat per unit of time. There...
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This document was uploaded on 04/07/2014.
- Spring '14