Consider an economy in which two factors of production, labor and capital, produce two goods: capital-intensive pharmaceuticals and labor-intensive clothing. Suppose that both factors of production are freely mobile across both industries and that all producers, consumers, capitalists, and workers are price takers. Suppose that there are currently steep tariffs on all imported goods, but there is a bill before Parliament to eliminate those tariffs, and the government has invited citizen representatives of workers and capitalists to express their opinions on the matter. Suppose that all citizen representatives understand the consequences of eliminating the tariffs, and suppose as well that each representative wants to maximize his or her real income. The parliamentary hearing takes testimony from four groups, representing workers in the clothing industry, capitalists in the clothing industry, workers in the pharmaceutical industry, and capitalists in the pharmaceuticals industry, respectively.
1 a. If this economy is capital abundant relative to the rest of the world, which of these four groups do you expect to support the tariff-elimination bill, and which do you expect to oppose it? Why? Be as precise and thorough as possible. b. Now, suppose that the country is labor abundant relative to the rest of the world, and answer the same question, explaining any differences there might be with the previous answer. c. How would you answer now change if, instead of being freely mobile, we assumed that both labor and capital were sector-specific? d. Comment on how the mobility or immobility of factors across industries affects the nature of political conflict we can expect to see over trade policy.
Show more
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more