Why are prices of factors of production NOT equalized?

What will be an ideal response?


Again this statement may or may not be argued to be true. On the one hand, the large volume and growth in world trade between the United States and other OECD countries during the 50 years since World War II has clearly been related to a near universal (average) convergence in real wage levels in these countries, whereas the most obvious cases in which such a convergence did not take place (North-South countries) also happened to be cases in which trade was relatively small and "missing."

There are many theoretical reasons why factor price equalization may not occur. If the relative country relative abundances are very different, then the theory itself does not predict that the wage equalization will occur. The same is true of factor intensity reversals exist within relevant relative wage ranges. Dynamic migration models such as Harris-Todaro are another class of theory that may suggest that even if the static equilibrium solution does include the factor-price equalization, the dynamic path of the model may never reach this solution, so that when observed within any finite time frame, it a lack of equalization would exist..

Economics

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Is the poverty rate the lowest among Hispanic households, black households, or white households?

What will be an ideal response?

Economics

Evaluate the following statement. "I used my own money, my own land and my own equipment to start my business. Therefore I don't have any costs associated with running my business"

What will be an ideal response?

Economics

The increased willingness of women to enter the workforce has most likely lead to what outcome in the labor market?

a. an increase in labor demand and higher real wages. b. an increase in labor supply and higher real wages. c. an increase in labor supply and high real wages. d. a decrease in labor demand and lower real wages. e. none of the above.

Economics

Within the range of exchange rates that permits specialization and trade to take place, the exchange rate will determine which country gains the most from trade.

Answer the following statement true (T) or false (F)

Economics