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Study Resources (Business Management)

  5.Use the following information to answer the questions below: Manufacturing:Sales revenue 5 PM ? QM 5 150 Payments to labor 5 W ? LM 5 100 Payments to capital 5 RK ? K 5 50 Agriculture:Sales revenue 5 PA ? QA 5 150 Payments to labor 5 W ? LA 5 50 Payments to land 5.
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  8.On March 2, 2013, Tajikistan successfully negotiated terms to become a member of the World Trade Organization. Consequently, countries such as those in western Europe are shifting toward free trade with Tajikistan. What does the Stolper-Samuelson theorem predict about the impact of the shift on the real wage of low-skilled.
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  11.According to the Heckscher-Ohlin model, two countries can equalize wage differences by either engaging in international trade in goods or allowing high-skilled and low-skilled labor to freely move between the two countries. Discuss whether this is true or false, and explain why. 12.According to the standard Heckscher-Ohlin model with two factors.
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  6.Suppose when Russia opens to trade, it imports automobiles, a capital-intensive good. a.According to the Heckscher-Ohlin theorem, is Russia capital-abundant or labor-abundant? Briefly explain. c.What is the impact of opening trade on the real rental on capital? d.Which group (capital owner or labor) would support policies to limit free trade? Briefly explain.     .
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  3.Consider a U.S. firm’s production of automobiles, including research and development and component production. a.Starting from a no-trade equilibrium in a PPF diagram, illustrate the gains from offshoring if the United States has comparative advantage in component production. research and development. Illustrate this change on your diagram and state the implications for.
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  7.Read the article by Lori G. Kletzer and Robert E. Litan, “A Prescription to Re lieve Worker Anxiety,” Policy Brief 01-2, (Washington, D.C.: Peterson Institute for International Economics), available online at http://www.iie.com/publications/pb/ pb.cfm?researchid=70, which refers to the U.S. recession of 2000 and 2001. Then answer the following: a.Under the most recent.
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  6.The diagram below shows what happened to the relative wage and relative demand for skilled labor in the U.S. manufacturing sector during the 1990s. These points are plotted using the data from Figures 7-5 and 7-6. a.What must have happened to the demand and supply curves to explain this  change in.
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  9.Suppose two countries, Canada and Mexico, produce two goods: timber and televisions. Assume that land is specific to timber, capital is specific to televisions, and labor is free to move between the two industries. When Canada and Mexico engage in free trade, the relative price of televisions falls in Canada.
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  4.Starting from equilibrium in the specific-factors model, suppose the price of manufactured goods falls so that wages fall from W9 to W in Figure 3-5. a.Show that the percentage fall in the wage is less than the percentage fall in the price of manufacturing, so that the real wage of labor.
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  9.a. Of two products, rice and paintings, which product do you expect to have a  higher index of intra-industry trade? Why? b. Access the U.S. TradeStats Express website at http://tse.export.gov/. Click on “National Trade Data” then “Global Patterns of U.S. Merchandise Trade.” Under the “Product” section, change the item to.
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  8.In  the specific-factors model, assume that the price of agricultural goods de- creases while the price of manufactured goods is unchanged (DPA/PA , 0 and DPM/PM 5 0) . Arrange the following terms in ascending order : DRT/RT    DRK/RK    DPA/PA    DPM/PM    DW/W Hint: Try starting with a diagram such as Figure 3-5.
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  5.Our derivation of the gravity equation from the monopolistic competition model used the following logic: (i)Each country produces many products. (ii)Each country demands all of the products that every other country produces. (iii)Thus, large countries demand more imports from other countries. The gravity equation relationship does not hold in the Heckscher-Ohlin model. Explain how.
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  1.Why is the specific-factors model referred to as a short-run model? 2.Figure 3-7 presents wages in the manufacturing and services sectors for the period  1973 to 2012. Is the difference in wages across sectors consistent with either the Ricardian model studied in Chapter 2 or the specific-factors model? Explain why or.
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  11.Figure 5-14 is a supply-and-demand diagram for the world labor market. Starting at points A and A *, consider a situation where some Foreign workers migrate to Home, but not enough to reach the equilibrium with full migration (point B ). As a result of the migration, the Home wage.
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  6.The United States, France, and Italy are among the world’s largest producers. To  answer the following questions, assume that their markets are monopolistically competitive, and use the gravity equation with B 5 93 and n 5 1.25. GDP in 2012 ($bn)Distance from the United States (miles) France$ 2,7765,544 Italy2,1966,229 United States14,991— a.Using the gravity equation,.
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  7.What evidence is there that Canada is better off under the free-trade agreement with the United States? 8.In the section “Gains and Adjustment Costs for the United States under NAFTA,” we calculated the lost wages of workers displaced due to NAFTA. Prior experience in the manufacturing sector shows that about two-thirds.
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1.In the short-run specific-factors model, examine the impact on a small country following a natural disaster that decreases its population. Assume that land is specific to agriculture, capital is specific to manufacturing, and labor is free to move between the two sectors. a.In a diagram similar to Figure 5-2, determine the.
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  1.This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of handmade rugs and assembly line robots in Canada and India. a.Which country would you expect to be relatively labor-abundant, and which is capital-abundant? Why? b.Which industry would you expect to be relatively labor-intensive, and which is capital-intensive?.
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  6. Answer the following question using the information given by the accompanying  table. 6 2 8 Home/Foreign ratio 3 / 4 a. b. c. d. Complete the previous table in the same  manner as Table 2-2. Which country has an absolute advantage in the production of bicycles? Which country has an absolute advantage in the production of snowboards? What is the.
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  8.Continuing from Problem 7, we now use the factor price insensitivity result to compare factor prices across countries in the Heckscher-Ohlin model. a.Illustrate the international trade equilibrium on the Home and Foreign production possibility frontiers. Hint: You can refer back to Figure 4-3 to see the international trade equilibrium. b.Suppose that the.
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  1.Consider an offshoring model in which the labor hours of four activities in the United States and Mexico are as follows: Hours of Labor Used in Each Activity (Per Un it of Output) AssemblyComponent ProductionOffice ServicesR&D Low-skilled laborMexico: 20Mexico: 12Mexico: 8Mexico: 4 U.S.: 5U.S.: 3U.S.: 2U.S.: 1 High-skilled laborMexico: 4Mexico: 4Mexico: 8Mexico: 40 U.S.: 1U.S.: 1U.S.:.
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  2.Consider an offshoring model in which Home’s high-skilled labor has a higher relative wage than Foreign’s high-skilled labor and in which the costs of capital and trade are uniform across production activities. a.Will Home’s offshored production activities be high or low on the value chain for a given product? That is,.
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  12.A housekeeper from the Philippines is contemplating immigrating to Singapore in  search of higher wages. Suppose that the housekeeper earns approximately $2,000 annually and expects to find a job in Singapore worth approximately $5,000 annually for a period of 3 years. Furthermore, assume that the cost of living in Singapore.
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  1.Explain how increasing returns to scale in production can be a basis for trade. 2.Why is trade within a country greater than trade between countries? 3.Starting from the long-run equilibrium without trade in the monopolistic competition model, as illustrated in Figure 6-5, consider what happens when the Home country begins trading with.
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  4.In the short-run specific-factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops. a.Redraw panel (a) of Figure 5-11 starting from the initial equilibrium at point A. b.What is the effect of this change in land.
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  10.Following are data for soybean yield, production, and trade for 2010–2011: a.In which countries does land benefit from free trade in soybeans? Explain. b.In which countries does land lose from free trade in soybeans? Explain. c.In which countries does the move to free trade in soybeans have little or no effect on the.
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  2.Leontief’s paradox is an example of testing a trade model using actual data observations. If Leontief had observed that the amount of labor needed per $1 million of U.S. exports was 100 person-years instead of 182, would he have reached the same conclusion? Explain. 3.Suppose that there are drastic technological improvements.
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  12.In the text, we learned that workers displaced by import competition are eligible for compensation through the Trade Adjustment Assistance program. Firms are also eligible for support through Trade Adjustment Assistance for Firms, a federal program that provides financial assistance to manufacturers affected by import competition. Go to http://www.taacenters.org to.
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  4.Starting  from the long-run trade equilibrium in the monopolistic competition model, as illustrated in Figure 6-7, consider what happens when industry demand D increases. For instance, suppose that this is the market for cars and lower gasoline prices generate higher demand D. a.Redraw Figure 6-7 for the Home market and show.
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  4.Using the information in the chapter, suppose Home doubles in size and Foreign remains the same. Show that an equal proportional increase in capital and labor at Home will change the relative price of computers, wage, rental on capital, and the amount traded but not the pattern of trade.     .
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