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. The other country in the model is Vincyland. Questions: Give a short background on the Heckscher-Ohlin Trade model and then answer the following questions. (d) Show the necessary graphs to fully explain all requested effects. Ensure to label graphs and give brief explanations. (e) 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.Should a subsidy have given a more desirable solution? Please explain
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. The other country in the model is Vincyland.
Questions:
Give a short background on the Heckscher-Ohlin Trade model and then answer the following
questions.
(d) Show the necessary graphs to fully explain all requested effects. Ensure to label graphs and
give brief explanations.
(e) 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.Should a subsidy have given a more desirable solution? Please explain
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