Question

True or false. briefly explain your judgements. a. if there are two goods, apples (a) and bananas (b), then home has a comparative advantage in the production of apples if pa < paw and pb > pbw (where pa and pb are domestic prices and paw and pbw are world prices). b. land and capital owners usually welcome foreign immigrants. c. factors that can be used/employed in the exporting industries will always gain from trade liberalization. d. in the heckscher-ohlin model, when a labor abundant country opens to trade with the world, its wage rental ratio goes up and every producer demands a higher labor-capital ratio. e. in the long run, international movement of labor and capital will not affect the real wage and real capital rental across countries, but it will affect the output of goods produced across countries. f. in the short run, an outflow of capital is expected to cause an increase in the real rental of capital and an increase in the real rental of land in the origin country. g. as china receives more and more fdi, under the assumptions of heckscher-ohlin model, it will produce more and more capital-intensive products. h. as the labor cost increases in china, more activities will be offshored to other developing countries such as vietnam who has comparative advantage in labor intensive tasks. this type of offshoring will benefit the workers in vietnam and the capital owners in china will also benefit.

Answer 1

Several economic statements were evaluated for their truthfulness, discussing concepts like comparative advantage, immigration effects, trade liberalization impacts, and Heckscher-Ohlin model implications on international trade and production.

Step-by-step explanation:

True or false judgments on a series of economic statements related to comparative advantage, immigration, trade liberalization, and the Heckscher-Ohlin model:

a. False. Home has a comparative advantage in producing apples if it can do so at a lower opportunity cost than elsewhere, which might not be reflected in the price comparison alone.

b. It depends. Land and capital owners may welcome immigrants if they provide cheap labor, but may oppose if they threaten their economic interests.

c. Not always. Factors employed in the exporting industries may gain from trade liberalization unless their increased output is outweighed by reduced prices due to competition.

d. True, in the Heckscher-Ohlin model, a labor-abundant country opening to trade would see an increase in the wage-rental ratio and a higher labor-capital ratio in production.

e. False. International movement of labor and capital can affect real wages and real capital rental rates across countries as they lead to changes in the supply of labor and capital.

f. True. An outflow of capital would likely lead to a rise in the real rental of capital due to decreased supply.

g. It depends. Under Heckscher-Ohlin, China would produce more capital-intensive products if it receives FDI and has the necessary capital abundance relative to labor.

h. True. As labor costs rise in China, offshoring labor-intensive activities to countries with a comparative advantage in labor, like Vietnam, can be beneficial for workers in Vietnam and capital owners in China.