In the 2-factor, 2-good Heckscher-Ohlin model, an influx of workers from across the border wouldA) move the point of production along the production possibility curve.B) shift the production possibility curve outward, and increase the production of both goods.C) shift the production possibility curve outward and decrease the production of the labor-intensiveproduct.D) shift the production possibility curve outward and decrease the production of the capital-intensiveproduct.E) shift the possibility curve outward and displace preexisting labor.

In the 2-factor, 2 good Heckscher-Ohlin model, the country with a relative abundance of ________ willhave a production possibility frontier that is biased toward production of the ________ good.A) labor; labor intensiveB) labor; capital intensiveC) land; labor intensiveD) land; capital intensiveE) capital; land intensive

5. In the 2 factor, 2 good Heckscher-Ohlin model, the production possibility frontier is kinked whenA) a country does not engaged in tradeB) the opportunity cost of production is constantC) there is no factor substitution in productionD) there are unemployed factor resourcesE) transportation cost are very high.

The Heckscher-Ohlin model assumes that there are two countries, each of which produces two goods(say manufactures and agriculture) using labor and capital. Which of the following is an additionalassumption of the Heckscher-Ohlin model?A. The ratio of the quantity of labor to the quantity of capital is different for each nation, resulting indifferent “endowments” of capital and labor.B. One nation has larger quantities of both capital and labor than the other country.C. Capital is a specific resource in producing manufactured goods, and labor is a specific resource inproducing agricultural goods in each country.D. Labor and capital can move between countries

In the Heckscher-Ohlin model, an increase of capital stock by 30% and an increase of labour stock by 15% will Group of answer choices increase the output of labor-intensive good and will have an ambiguous effect on the output of capital-intensive good increase the output of labor-intensive good and will not affect the output of capital-intensive good have an ambiguous effect on the output of both goods increase the output of capital-intensive good and have an ambiguous effect on the output of labor-intensive good

Consider a long-run Heckscher-Ohlin model with two goods (computer and shoe) and two factors of input (labour and capital). Both labour and capital can move between industries freely. Suppose that computers use 10 units of capital for each worker, so that KC=8LC𝐾𝐶=8𝐿𝐶, whereas shoes use 2 units of worker for each capital, so that 2KS=LS2𝐾𝑆=𝐿𝑆. There are 200 workers and 400 units of capital in the economy.a) Summarize the above information in an Edgeworth Box. (5 marks)