How is the [specific-factors model] different than the [Hecksher-Ohlin model] ?
in the [Hecksher-Ohlin model] there are two mobile factors, labor (L) and capital(K) compared to just ONE mobile factor in the [specif-factors model] which is labor(L). Also the [specific-factors model] is a short-run model, and the [Hecksher-Ohlin model] is a long-run model
What are the two main reasons why international trade has strong effects on the distribution of income?
1. resources cannot move immediately or without cost from one industry to another 2. industries differ in the factors of production they demand
What is a [short-run] consequence of trade?
resources are not able to move immediately or without cost from one industry to another
What is a [long-run] consequence of trade?
a shift in the mix of goods a country produces, normally, will reduce the demand for some factors of production, while raising the demand for other factors of production
How can we find an economy's [production possibilities?]
since Labor (L) is the only mobile factor, we can just look at how the economy's [output changes] as labor is [shifted from one sector to another]
What is the [marginal product of labor]?
the addition to output generated by adding one more person-hour
what is another way to say "the opportunity cost of cloth in terms of food" ?
the number of units of food output that must be sacrificed to INCREASE cloth output