What does the Stolper-Samuelson theorem predict will happen to the real returns to factors of production after trade occurs?
What does the Stolper-Samuelson theorem predict will happen to the real returns to factors of production after trade occurs? France and Italy only trade with each other. Each produces wine and bread. The production of bread is relatively capital intensive, and the production of wine is relatively labor intensive.
Which of the following is one conclusion of the Heckscher-Ohlin model quizlet?
Which of the following is one conclusion of the Heckscher-Ohlin model? With two goods and two factors, each country will export the good that uses intensively the factor of production it has in abundance and will import the other good. You just studied 41 terms!
What is the conclusion of the Heckscher-Ohlin model?
Given these assumptions, Heckscher and Ohlin reached the conclusion that countries will have a comparative advantage in goods that are produced with the factor of production (land, labor or capital) that the country has an abundance of. This will logically lead to higher exports of those goods.
Which of the following will happen when a small country enacts an export subsidy?
The world price will increase and the domestic price will decrease. Which of the following will happen when a small country enacts an export subsidy? The domestic price of the subsidized export will increase.
What is export subsidy example?
Export subsidy is a government policy to encourage export of goods and discourage sale of goods on the domestic market through direct payments, low-cost loans, tax relief for exporters, or government-financed international advertising. Saudi Arabia is a net exporter of wheat, Japan often is a net exporter of rice.
What is the impact of export subsidy?
An export subsidy lowers consumer surplus and raises producer surplus in the exporter market. An export subsidy raises producer surplus in the export market and lowers it in the import country market. National welfare falls when a large country implements an export subsidy.
What are the effects of export subsidy?
An export subsidy will raise the domestic price and, in the case of a large country, reduce the foreign price. An export subsidy will increase the quantity of exports. The export subsidy will drive a price wedge, equal to the subsidy value, between the foreign price and the domestic price of the product.
What are the advantages of export subsidies?
Export subsidies can be attractive because they can increase domestic firms’ market share in foreign countries, and hence allow for greater profits. This policy brings domestic firms closer to the Stackelberg leader output level.
What are the arguments against protection?
Various arguments are used against protectionism. These include: Inefficiency of resource allocation in the long run – the imposition of tariffs, or other protectionist measures, in the long run results in losses of allocative efficiency.