Assuming a two country two good perfect competition model


Assuming a two country, two good, perfect competition model of trade with multiple factors, and mobile labor but specific other factors. Suppose that country finds that with trade the relative price of one of the goods it produces, say machines, has decreased. If machines are produced using capital and labor, and the other good, textiles are produced using land and labor. Explain clearly what happens to the fortunes of these four groups as a result of trade: Owners of labor employed in textiles, owners of labor employed in machines, owners of land, and owners of capital. Which of these groups, if at all any, would be opposed to trade?

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Business Economics: Assuming a two country two good perfect competition model
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