Trade Problem Set 70 22
 

1. Imagine that Argentina produces beef and corn using labor as the only input. Suppose Argentina liberalizes trade with the rest of the world and the price of beef in terms of corn rises. In the following table indicate the effect of free trade on the variables listed in the first column under the two alternative assumptions. In the first case assume Argentina is described by a standard Ricardian model. In the second case assume Argentina is described by an immobile factor model. You do not need to show your work. Use the following notation: + the variable increases


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