The economical journal - Essay Example

Download file to see previous pages... In this empirical analysis, I focus on discussing the major roles of micro and macroeconomics, and their effect on the economy. Classical theory suggests that free mobility of factors of production among diverse regions tends to level the relevant and supreme prices of prolific services in the different regions. The shift of labor from a region of high population to a lower populated region results in a drop in wage rates in the less populated region, relative to its land rates and commodities. At the same time, the high-populated region’s land rates would drop relative to real wages, which would rise. Equilibrium of complete and relation factors prices would lead to the cease of labor migration. In the Ohlin analysis, he compares two countries, Europe and America, with land and labor being immobile. Food and clothing are mobile and obey the production theory of productions; as a result, diminishing returns change the proportional unit relevant to changes in land and labor, affects the marginal productivity. His analysis of proportional change in factors explains the difference in comparative advantage that occurs and assumes the resulting series of production and specialization. Ohlin attributes the food production in America, and land exhaustive industry to the point that the unit of American land is a lot to provide the needed labor force. In comparison, Europe has greater labor in relation to land, which alternately results in lower lands rents thus lead to the high production of clothing. This explains that each country would adapt the theory that favors their areas of specialization by using the abundant factor of production that is efficient to them. The neo-classical appearance of proportional gain In the figure below, the production-possibility curve in the American economy increases as labor and land shifts in an optimal manner compared to food production. This is possible since the proportion land and labors statistically proves the theory, while keeping the marginal ratios of land and labor the same, and market wages to rent. In figure b, the production–curve for Europe is higher in clothing than food since labor is abundant, and it determines the output production unit. The steep slope for Europe's production curve confirms this theory relatively. Conclusion The study of microeconomics prepare the learner cope with numerous understanding of the economy, the mobility factors that are involved in production, like labor, and also the shift land rates relative to rent, which maximizes the output production unit. In my view, the subject is a fundamental basis for any student willing to major in economics INTERNATIONAL TRADE AND FACTOR MOBILITY Introduction It is great achievement to come up with an economic structure that gives a framework of understand and examining major economic outcome of the day and future. In the early 1950s, the government actively regulated cross-border financial transaction. A study of the bondage among international capital community, domestic trade and international trade is vast in today’s economy. International aspect mobility acts surrogate for trade in a different sense in (H-O-S) model, this is causes a decline in the degree of trade, as the volume of factors of production increases substantially. Theoretical works have proven that diverging models with standards H-O-S ...Download file to see next pagesRead More