Homework Help: international trade

Posted by ben on Thursday, May 24, 2012 at 12:14pm.

2. Consider two countries, Home and Foreign. Assume that Home is labor-abundant while Foreign is land-abundant. Also suppose that there are two industries, wine and cheese, with wine being the more labor-intensive industry.
a) Suppose that both wine and cheese industry produce homogeneous products and are perfectly competitive. What is the pattern of trade between Home and Foreign?
b) Now suppose that the cheese industry produces differentiated products and is therefore characterized by monopolistic competition. Wine industry is still perfectly competitive. What is the pattern of trade between Home and Foreign?
c) Finally, in addition to the assumption of part (b), suppose that Foreign has experienced population growth, and as a result both Home and Foreign now have exactly the same land/labor ratio. Will the two countries trade?

No one has answered this question yet.

Answer this Question

Related Questions

international trade - the heckscher- ohlin model question is below.. can anyone ...
international trade - Suppose when Russia opens to trade, it imports automobiles...
International Trade-Economics - The demand and supply curves for an import-...
Business - • Consider the following scenario: Your company sells its ...
Trade-Economics - 1.United States and Mexico have two industries; call them, L-...
economic - Show graphically and explain how a policy that increases the ...
12th grade american governmet - Research Ronald Reagan especially with regards ...
inb - I have to write a business memo about this topic:Your company sells its ...
intro to business - calendula,inc sells its herbal teas at a lower price in ...
Literacy - Calendula, Inc. sells its herbal teas at a lower price in foreign ...

For Further Reading

First Name:
School Subject:
Answer: