Assume that Trinbago is a small country that produces wine and motor vehicles, where motor vehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin (H-O) assumptions hold. (d) In autarky, according to Ohlin, how does Trinbago’s relative price of labour compare to Vincyland’s? (e) Show the necessary graphs to fully explain all requested effects. Ensure to label graphs and give brief explanations. (f) Given that Vincyland is a small country, examine the partial equilibrium welfare effects associated with imposing a tariff on their import good given that the prediction of the imported good yields a positive externality. (g) Should a subsidy have given a more desirable solution.
Assume that Trinbago is a small country that produces wine and motor vehicles, where motor
vehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin
(H-O) assumptions hold.
(d) In autarky, according to Ohlin, how does Trinbago’s relative price of labour compare to
Vincyland’s?
(e) Show the necessary graphs to fully explain all requested effects. Ensure to label graphs and
give brief explanations.
(f) Given that Vincyland is a small country, examine the partial equilibrium welfare effects
associated with imposing a tariff on their import good given that the prediction of the
imported good yields a positive externality.
(g) Should a subsidy have given a more desirable solution. Please explain and provide references.
Step by step
Solved in 4 steps with 2 images
