ECON 441 Final: Final Exam Fall 2003 Solutions
Document Summary
The questions are worth a total of 100 points, as indicated, and you will have 120 minutes to complete the exam: [25 points] you are an economic advisor to ilovia, a relatively labor abundant developing country. The country imports flarks from the more capital-abundant rest of the world, and you"ve just learned that, for reasons you do not know, the relative price of flarks is about to fall on world markets. The government of ilovia wants to know whether this change will be good or bad for the country, and also whether the separate owners of capital and or labor will gain or lose from this change. Heckscher-ohlin model to answer these questions under each of the following assumptions, using the tools of the respective models to show how you arrive at your answer: [15 points] the two-good model, with ilovia producing both goods.
