Hollywoodland, Being Self-Sufficient in Most Products, Trades Only Two Goods

question 56

Essay

Hollywoodland, being self-sufficient in most products, trades only two goods with the Rest of the World (ROW), movies and automobiles. Both of these goods are produced using skilled labor (L) and capital (K) with the returns to capital being the interest rate (r) and the returns to skilled labor being the wage rate (w). The production of automobiles is capital intensive relative to the production of movies and Hollywoodland is skilled-labor abundant relative to the ROW.
A)State the Heckscher-Ohlin theorem and use it to predict the pattern of trade between Hollywoodland and the ROW
B)If the price of Hollywoodland's imports rises, the price of its exports remaining unchanged, what would happen to the factor returns in Hollywoodland? State the theorem used to explain the answer and, briefly state the intuition behind the theorem.
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• A)State the Heckscher-Ohlin theorem and use it to predict the pattern of trade between Hollywoodland and the ROW
• B)If the price of Hollywoodland's imports rises, the price of its exports remaining unchanged, what would happen to the factor returns in Hollywoodland? State the theorem used to explain the answer and, briefly state the intuition behind the theorem.
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Definitions:

Cross-Classification Table

A tabular method to display the frequency distribution of variables, showing how many times each combination of categories occurs; often used in statistics to analyze categorical data.

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Customers who purchase products or services during a promotional campaign, often attracted by discounts or special offers.

Bar Charts

A graphical representation of data using bars of different heights or lengths proportional to the values they represent.

Promotional Customers

Customers who engage with or purchase from a business primarily during promotional campaigns or through special offers.