Assume that a country Owasia operates in the immobile factor model model and is in autarky. It produces candies and toys, employing 30 people in the former industry and 10 in the latter. Each worker works for nine hours each day. The unit labor requirements in the two industries are 6 hours per toy and 3 hours per candy. Calculate the autarky price ratio, PT / PC, in Owasia. O 2 candies per toy O 1/2 candy per toy O 3 candies per toy O 6 candies per toy O 1/6 candy per toy

B. One Good, Two Factor Mobility Model. In the diagram below show how free trade in both unskilled and skilled labor leads to factor price equalization and increased output in both countries starting from the no trade endowment point E. You need to show (i) The original isoquants at the endowment point, (ii) the original wage rate ratios of skilled to unskilled workers, (iii)the resulting isoquants with trade, (iv) the migration pattern between the home and foreign countries, and (v) mention the impact on wages in H. Of • E Ls

ROBOTS 60 40 30 20 10 0 22 0 50 BEER Assuming robots stands for capital and beer consumer goods, both countries start from the same production possibilities frontier, and the growth path of country 1 is from point (a) to (b) to (c), while country 2 goes from points (d) to (e) to (f) expanding their respective PPF curves, what can you conclude about these countries? O a) Country 1's preference for capital goods will allow it to surpass Country 2 in production of both capital and consumer goods. O b) This model assumes that Country 1 has the requisite infrastructure that allows the capital goods Country 1 produces to be productive, O c) Country 1 produces the right type of capital, that is productive in making goods society wants. O d) Country 1 does not squander the wealth created by its economic growth. O e) All of the above 10 20 30 40

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Zagreb International Review of Economics & Business, Vol. 10, No. 1, pp. 33-66, 2007© 2007 Economics Faculty ZagrebAll rights reserved. Printed in CroatiaISSN 1331-5609; UDC: 33+65Outsourcing to China: Opportunities, Threats, and StrategicFitIlan Alon*Theodore T. Herbert**J. Mark Munoz***Abstract: China is a prominent outsourcing destination in Asia. International labour outsourcing,specially in the IT sector, has grown rapidly in recent years. This article defines outsourcingthrough an extensive review of the literature and discusses the opportunities and challengesfor outsourcing to China. Seeking strategic ‘fit’ among the disparate elements that influencethe firm’s outsourcing decision is recommended. The authors explore the IT and businesslandscapes in China and propose strategies for outsourcing success there.Keywords: labour outsourcing, China, information technology, international business,…

2) Assume that Mexico has a higher labor-to-capital ratio than the United States, leaving the United States mostly endowed with capital relative to Mexico. Assume also that clothing is labor-intensive in production relative to autos. a. Use the factor endowment theory framework to label the two transformation schedules below, indicating which one represents Mexico and which one the United States. Qeioting Relothing Qauios autos b. Assuming similar tastes or preferences as reflected in the two indifference curves shown in part a, draw the pre-trade price line for each country. Which one is steeper? What does this mean? In which country are autos relatively more expensive? 3.