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ECON 4850 15850UNI, Spring 2019Assignment 3Part I. Heckscher – Ohlin ModelConsider two countries , Vietnam and China , producing two goods , textile and televisions . Suppose thattextile is relatively labor- intensive . Vietnam has 20 units of capital and 16 units of labor and China has300 units of capital and 150 units of labor .1 . Which country is relatively capital – abundant ? Explain .2. Which country will export textile ? Explain.3 . In Vietnam the production of which good decreases under trade ? In China ?”4 . In China , is the relative price of televisions higher under free trade or no trade ? Explain .5 . Which group benefits from trade in China ? In Vietnam ?Part II . Heckscher – Ohlin Model and Stolper – Samuelson theorem1 .Suppose that there are drastic technological improvements in shoe production at Home such that shoefactories can operate almost completely with computer- aided machines . Consider the following datafor the Home country .”Computer’s .”Sales revenue = PC X Qc = 100Payments to labor = W X Le = 50ssignmedPayments to capital = Kc X R = 50Percentage increase in the price _ _ _ _ _ 0%PCshoes.”Sales revenue == Pr X Or = 100
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