ECS 3702
South Africa and Lesotho are two countries using capital (K) and labour (L) to produce cars and blankets. South Africa is a capital abundant country and Lesotho is a labour abundant country. The production of cars is capital intensive and blanket production is labour intensive. There is incomplete specialization in both countries.
Using the hypothetical scenario above, explain and show with the aid of a well-drawn diagram, that factor endowments determine comparative advantage and therefore that there are gains to be made from trade between the two countries.
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PPF has to be drawn with help of the information that A is
relatively capital-abundant and that productiok of X is relatively
capital intensive.
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These questions are about international trade.
I want to know the answers.
5 Heckscher-Ohlin Model. Suppose the production of cloth is labour intensive and the production of food is land intensive and suppose the United States (US) is labour abundant and Canada is land abundant. (a) Show how the US production possibility frontier (PPF) differs from the Canadian PPF. Briefly explain. (Use the general version of the PPF's) (b) Which country will have the lower price of cloth Pc relative...
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This is all information given for the question. The
PPF has to be drawn with help of the information that A is
relatively capital-abundant and that productiok of X is relatively
capital intensive.
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