question archive can someone please help with this model? In the Heckscher-Ohlin model, suppose the two factors of production are: high-skilled labor (H) and regular labor (L)
can someone please help with this model? In the Heckscher-Ohlin model, suppose the two factors of production are: high-skilled labor (H) and regular labor (L)
Subject:EconomicsPrice: Bought3
can someone please help with this model?
In the Heckscher-Ohlin model, suppose the two factors of production are: high-skilled labor (H) and regular labor (L). The two sectors are manufacturing and business services. Manufacturing uses regular labor more intensively, and business services uses high-skilled labor more intensively. The two countries are the U.S. and China, and the U.S. has a comparative advantage in business services.
i. (15) Illustrate the effect of opening up to trade on the U.S. with the PPF and indifference curve diagram. Make sure you clearly label everything. What happens to the relative price of business services in the U.S.? Show clearly the gains from trade.
ii. (10) What happens to the relative wage of high-skilled labor? Does inequality (the skill premium) increase? Show all work and explain.
