Home Page EC 340, International Trade and Finance Files EC 340 Problem Sets Stolper and Samuelson

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1. Suppose that NAFTA is expanded to include Chile. This will increase both American imports of land-intensive and labor-intensive Chilean products and Chilean imports of capital-intensive American products. Discuss the short-run and long-run effects this would have on land rents, wages, and payments to capital in the United States.

2. Explain the Rybczynski theorem.

3. Discuss the product cycle theory as an explanation for why comparative advantage in knowledge-intensive products shifts rapidly.

David A. Latzko 318 COB Department of Business and Economics Wilkes University Wilkes-Barre, PA 18766 phone: (717) 408-4718 fax: (717) 408-4917 dlatzko@wilkes.edu wilkes1.wilkes.edu/~dlatzko