International trade leads to complete equalization of factor prices. Discuss
What will be an ideal response?
This statement is typically "true . . . but." Under a strict and limited set of assumptions, such as the original Heckscher-Ohlin model which excludes country specific technologies; non-homothetic tastes; factor intensity reversals; large country differences in (relative) factor abundances, more factors than goods, and an equilibrium solution within the "cone of specialization"; then it may be demonstrated that internal consistency demands that the above stated sentence is "true." However, the minute one relaxes any of the above listed assumptions one may easily identify solutions, which contradict the factor price equalization theorem.
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Refer to Figure 8.1. If Charla and Mirna agree to pay each other $350 to install the pollution-control device on their heating systems, the payoffs in the upper-right and lower-left cells in the payoff matrix would become
A) +350, +350. B) +140, +140. C) -560, -560. D) +840, +840.
What explains any divergence between nominal and real GDP?
A) Constant prices B) Changing prices C) Constant output D) Changing output E) None of the above.
Suppose Lando Calrissian owns a smuggling business whose total revenue is $30,000 per month. The accompanying table shows Lando's monthly expenses. If Lando weren't a smuggler, he would earn $6,000 per month working for the Rebel Alliance. Apart from pay, Lando is indifferent between working as a smuggler and working for the Rebel Alliance.Fuel$4,000Maintenance$12,000Weapons$6,000Bribes$3,000 What is Lando's accounting profit each month?
A. $5,000 B. ?$1,000 C. ?$5,000 D. $1,000
The number of central banks that exist in the world today is:
A. over 50 but less than 100. B. less than 10. C. about 250. D. over 180.