Using these two plots (also on the L7 slides), explain what happens to the labor market (H and L) during the structural change of two industries when the country participates in international trade. Why the original wages (in autarky) can no longer be sustained in this case?

This question is from Principles of Eco2 class.

If firms are in a competitive market, firms use marginal cost=price as a price-setting rule. Why multinational firms do not follow the price-setting rule like the firms in the competitive market (or why exporting firms do not follow the price-setting rule)? Your answer should be based on the characteristic market and the internal economies of scale. What is the price-setting rule for multinational firms?

Three former Uruguayan presidents recommended the current administration that without abandoning Mercosur, it should look at major trade blocks associations but at the same time a strong self criticism is needed because maybe the problem is not in Mercosur but in Uruguay. The absence of conditions in the Uruguayan economy to compete for markets and investments, the wrong energy and foreign policies and the infinite tolerance with the bilateral mechanism imposed by Argentina and Brazil in the region are the main causes by which Mercosur has seen its rules and institutions erode and most probably leading it to a major failure. The three leaders are Julio Maria Sanguinetti (1985/1990 and 1995/2000); Luis Alberto Lacalle (1990/1995) and Jorge Batlle (2000/2005). The only living president missing at the conference was Tabare Vasquez (2000/2005), who belongs to the current ruling coalition. “We need powerful friends and partners but distant” said Lacalle who suggested Uruguay should reach…