2. (25 points) Consider the following information about the factor content in exports and import
of a hypothetical economy: a) In the hypothetical economy provided, what is the capitallabor
ratio for exports? b) In the hypothetical economy provided, what is the capitallabor ratio for
imports? c) If this hypothetical economy is capital abundant, has the Heckscher-Ohlin model
correctly predicted the pattern of trade for this economy (Yes or No)? Explain your answer. 3. (
25 points) Consider an industry Z in which exports are $800 million and imports are $600
million. a) What is the value of the intra-industry trade (Grubel-Lloyd) index for industry Z ? b)
Is this industry characterized by intra-industry trade or interindustry trade? Explain. c) What kind
of industries would fit this description in the case of the United States? Give three examples and
explain your answers. 4. ( 25 points) Explain the difference between vertical and horizontal intra-
industry trade, providing specific examples to illustrate your answers..
2. (25 points) Consider the following information about the factor co.pdf
1. 2. (25 points) Consider the following information about the factor content in exports and import
of a hypothetical economy: a) In the hypothetical economy provided, what is the capitallabor
ratio for exports? b) In the hypothetical economy provided, what is the capitallabor ratio for
imports? c) If this hypothetical economy is capital abundant, has the Heckscher-Ohlin model
correctly predicted the pattern of trade for this economy (Yes or No)? Explain your answer. 3. (
25 points) Consider an industry Z in which exports are $800 million and imports are $600
million. a) What is the value of the intra-industry trade (Grubel-Lloyd) index for industry Z ? b)
Is this industry characterized by intra-industry trade or interindustry trade? Explain. c) What kind
of industries would fit this description in the case of the United States? Give three examples and
explain your answers. 4. ( 25 points) Explain the difference between vertical and horizontal intra-
industry trade, providing specific examples to illustrate your answers.
