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ECON 4290 Lecture Notes - Lecture 12: Free Trade, Factor Endowment, Marginal Product

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limegerbil648
15 Jan 2019
School
York University
Department
Economics
Course
ECON 4290
Professor
Xavier DeVassay

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Document Summary

Lecture 12 - december 3: speci c factor model, h. o. s. Message: in autarky, taste, technology, and endowment simultaneously determine: Message 2: in free trade, worlds relative prices, technology and endowment simultaneously determine: Introducing the elasticity of the labor marginal product: It tells how each sector will become more labour intensive when ^w < 0 ( or less labor intensive when ^w >0. If (the greek letter) gama is very big, it means that a tiny change in w will lead in a large changes in techniques. Exam answer : the additional labor most be absorbed, both sector will become more labor intensive ( where cost minimizing [lowering wages rates] and that depends on the elasticity of marginal products. Comments: suppose that p^c = p^f =0 (because we are in a small country) Use the four quadrants diagram to derive new ppf. You are prone to become more land intensive and less labour expensive.

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Related Questions

Based on the circular flow model money flows from households to businesses in:

1. factor market

2. product market

3. neither factor market nor product market

4. both factor market and product market

 

1. Within the specific factor model free trade has an ambiguous impact on the welfare of labor. Explain this statement in a few sentences.

2. Within the H-O framework what was the Leontief Paradox?

Be sure that your responses model clear economic reasoning and addresses each of the following:

1.) Consider the discrete Bertrand game described in the Oligopoly lecture notes/video. According to the rules of this game each student selects a number from the set {0,1,2, 3, 4, 5, 6, 7, 8, 9, 10} and is randomly matched with another student. Whoever has the lowest number wins that amount in dollars and whoever has the high number wins zero. In the event of ties, each student receives half their number in dollars. What number would you select if you played this game in our online class? Explain your reasoning.

2.) Continue to consider this discrete Bertrand model, but now assume that each student has a constant cost of 5 that is deducted from all payoffs. So whoever has the low number wins their number, minus 5. Whoever has the high number loses 5 total. In the event of a tie, each student wins an amount equal to their number divided by two, then minus five. Find any Nash equilibria in this game. Explain your reasoning.