Awesome Quiz On Agriculture

Based on the information provided, the marginal product of labor in the manufactured sector is higher than the agricultural sector. This means that each additional unit of labor in the manufactured sector is more productive than in the agricultural sector. Therefore, the manufacturing sector will demand more labor because it can produce more output with each additional worker, while the agricultural sector will demand less labor because it is less efficient in terms of labor productivity.

In the Ricardian model, a country as a whole benefits from free trade because it allows the country to specialize in producing goods in which it has a comparative advantage. This leads to increased efficiency and economic growth. However, in the specific-factors model, while the country as a whole may still benefit from free trade, some specific resources within the country may be negatively affected. This is because certain resources may become less valuable or obsolete in the face of competition from foreign producers. Thus, the specific-factors model recognizes that there can be winners and losers within a country due to free trade.

When world demand shifts towards high-tech manufactured goods, the relative price of manufacturing goods will increase. As capital is specific to manufacturing and labor is mobile between sectors, there will be a higher demand for capital in the manufacturing sector, leading to an increase in capital income. However, as labor is mobile, workers can easily move from agriculture to manufacturing, increasing the supply of labor in the manufacturing sector. This increase in labor supply will result in a decrease in labor income in the manufacturing sector. Therefore, the percentage change in labor income is less than the percentage change in the relative price of manufacturing goods.

In the two-sector specific-factors model, when the home country has a comparative advantage in manufactured output, trade will lead to an increase in the return on capital and a decrease in the return on land. This is because the home country will specialize in manufacturing, leading to an increase in demand for capital and a decrease in demand for land. As a result, the return on capital will rise due to increased demand, while the return on land will fall due to decreased demand.

In the two-sector specific-factors model, if the home country has a comparative advantage in manufactured output, the opening of trade with other countries can affect workers' welfare in different ways. The real wage in terms of the agricultural good may rise, which would benefit workers in the agricultural sector. However, the real wage in terms of the manufactured good may fall, which would harm workers in the manufacturing sector. Therefore, workers may be better off or worse off depending on the relative changes in real wages for each sector.

In this scenario, due to the drought, the price of agricultural goods rises. Since labor is mobile between sectors, workers can move from agriculture to manufacturing. As a result, the demand for labor in agriculture decreases, leading to a decrease in labor income. However, the increase in the price of agricultural goods does not directly translate to an increase in labor income. Therefore, the percentage change in labor income is less than the percentage change in the relative price of agricultural goods.

In the two-sector specific-factors model, if the home country has a comparative advantage in agriculture, the opening of trade with other countries can have different effects on workers. The real wage in terms of the agricultural good is expected to fall, which could make workers worse off. However, the real wage in terms of the manufactured good is expected to rise, which could make workers better off. Therefore, workers may be better off or worse off depending on the specific changes in real wages for each sector. The answer suggests that both scenarios are possible.

According to the specific-factors model, when there is a decrease in relative price and an expansion in one industry, the specific factor (i.e., the factor specific to that industry) will experience a decrease in its marginal product. This means that as more units of the specific factor are employed in that industry, the additional output produced by each additional unit of the factor will decrease. This is because the factor becomes relatively more abundant in that industry, leading to diminishing returns and a decrease in its productivity.

The return to capital after trade occurs is $12.00 per unit and the return to land after trade occurs is $2.5 per acre. The return to capital changes after trade occurs because there is more labor used per unit of capital in the manufacturing sector.

In the two-sector specific-factors model, if the Home country has a comparative advantage in manufactured output and trade occurs, it means that the Home country will specialize in manufacturing and export more manufactured goods. This will increase the demand for capital, as manufacturing requires more capital-intensive production methods. As the demand for capital increases, the return on capital will also increase. Therefore, the return on capital will increase faster than the price of the manufactured good.

When labor is mobile between sectors but capital and land are specific, labor will tend to benefit from trade when it spends a large amount of its income on the imported good. This is because when labor can easily move between sectors, it can take advantage of the lower prices of imported goods, which allows them to stretch their income further. Therefore, if labor spends a large portion of its income on imported goods, it will benefit the most from trade.

After trade occurs, the return to capital changes because there is more labor used per unit of capital in the manufacturing sector. This means that the manufacturing sector is able to produce more output with the same amount of capital by employing more labor. As a result, the return to capital decreases as the additional labor increases the productivity of capital.

When there are specific factors, owners of factors specific to the importing industry are harmed, owners of factors specific to export industries are benefited, and mobile factor owners (such as labor) in that importing industry either benefit or are harmed depending on consumption patterns.

In the specific-factors model, specific factors refer to resources that are specialized and cannot be easily moved between industries, such as land or specialized labor. Mobile factors, on the other hand, can easily move between industries, such as capital or skilled labor.

According to the given answer, when exports of a product rise, specific factors gain more than mobile factors. This is because the increase in exports leads to an increase in the demand for the specific factors used in producing that product. Since these factors are specific to the industry, their value and income increase.

Similarly, when imports rise, specific factors lose more than mobile factors. This is because the increase in imports leads to a decrease in the demand for domestically produced goods, which in turn reduces the demand for the specific factors used in producing those goods. As a result, the value and income of these specific factors decrease more compared to the mobile factors.

When a nation begins to trade, it will be able to sell (export) the product for which its own relative price is lower than other nations. This means that the nation has a comparative advantage in producing and selling that particular product. On the other hand, the nation will wish to buy (import) the product for which its own relative price is higher than other nations. This implies that the nation does not have a comparative advantage in producing and selling that product, so it is more cost-effective to import it from other nations. Finally, when trade occurs, the relative price of the export will rise. This is because the nation's ability to sell the product at a lower price than other nations will increase its competitiveness in the global market, leading to a higher price for its exports.

When the home country has a comparative advantage in manufacturing output, the amount of land used in producing agricultural output will remain unchanged when trade occurs (i). The amount of capital used in manufacturing production will also remain unchanged (ii). However, the return (rental) on land will fall (iii) due to increased competition from imported agricultural products. On the other hand, the return (rental) on capital will rise (iv) as the demand for manufacturing goods increases. The return (rental) on capital will also rise (v) due to increased demand for capital-intensive manufacturing production. If the comparative advantage is in agricultural output, the return (rental) on land will rise (vi) due to increased demand for agricultural products. However, the return (rental) on capital will fall (vii) as the demand for capital-intensive manufacturing goods decreases.

The correct answer is i) increase by 21.67%; ii) decrease by 7.5%; and iii) More output may be produced in the manufacturing sector. When the price of manufacturing goods increases by 10%, it leads to an increase in revenues for the manufacturing industry. As a result, the demand for capital increases, causing the rental rate on capital to increase by 21.67%. On the other hand, the change in wages is given as 5%, which leads to an increase in costs for the manufacturing industry. This decrease in profits causes the rental rate on land to decrease by 7.5%. Overall, with higher revenues and lower costs, more output may be produced in the manufacturing sector.

Under the condition of no trade, the relative price of manufacturing goods in Home is 1.66. If the two countries open their markets for trade, Home, which has the comparative advantage in manufacturing, will export manufacturing goods, while Foreign will export agriculture goods. As a nation begins to export, its own relative price of exported goods will rise, as it imports other goods, the relative price of those will fall, raising its standard of living.

As relative prices change due to trade, the expanding industry becomes more profitable and attracts more mobile resources, causing the marginal product of mobile resources in that industry to rise. Conversely, the contracting industry becomes less profitable and loses mobile resources, leading to a fall in the marginal product of mobile resources in that industry. For fixed resources, the marginal product in the expanding industry initially rises as it becomes more profitable, but eventually falls as the industry reaches its capacity. In the contracting industry, the marginal product of fixed resources initially falls as it becomes less profitable, but eventually rises as the industry shrinks. Finally, if the relative price of a product rises and labor is mobile, the equilibrium real wage will rise, but by less than the price increase in percentage terms due to the substitution effect.

not-available-via-ai