RIcardian Model, how to write a research paper

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Homework #1 ( 30 points)

 

Short Answer Questions:

  1. What specifically determines patterns of international trade and the level of real in the Ricardian model?(4 points)

 

  1. Why is the production possibility frontier a straight line in the Ricardian model?(2 points)

 

 

 

  1. Assume that Home and Foreign produce two goods, Airplanes (A) and Bicycles (B), and use the information below to answer the following questions.

 

In the No-Trade Equilibrium

  Home Country     Foreign Country
         
WageA=12 WageB=?   WageA=? WageB=6
MPLA=2 MPLB=?   MPLA=? MPLB=1
PA=? PB=4   PA=3 PB=?

 

 

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  1. What is the marginal product of labor for airplanes and bicycles in the Home country? What is the no-trade relative price of airplanes at Home?(4 points)

 

 

  1. What if the marginal product of labor for Airplanes and bicycles in the Foreign country? What is the notrade relative price of Airplanes in Foreign?(4 points)

 

  1. Suppose the world relative price of Airplanes in the trade equilibrium if PA/PB = 1. Which good will each country export? Briefly explain why.(4 points)

 

  1. In the trade equilibrium, what is the real wage at Home in terms of bicycles and in terms of Airplanes? How do these values compare with the real wage in terms of either good in the no-trade equilibrium?(4 points)

 

  1. In the trade equilibrium, what is the real wage in Foreign in terms of bicycles and in terms of Airplanes? How do these values compare with the real wage in terms of either good in the no-trade equilibrium? (4 points)

 

 

  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)

 

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

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