EC 340

Problem Set #2 - Stolper-Samuelson

Due by the end of class on January 26, 1998.

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.

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David A. Latzko
318 COB
Department of Business and Economics
Wilkes University
Wilkes-Barre, PA 18766
phone: (717) 408-4718
fax: (717) 408-4917