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1-What is the Stolper-Samuelson theorem? What are the underlying conditions and assumptions for the theorem?2-Describe Leontief’s paradox.?3-International outsourcing—the shifting of service activities from one country to another—was not an issue when the factor-price equalization theory was developed. Does the existence of outsourcing change the implications of the theory? Justify your answer.4-As a result of a new Japan-United States Free Trade Agreement (JUSFTA), the United States has shifted to free trade with Japan. Assume that the two major products are A-goods (agricultural products), which are relatively land-intensive, and M-goods (manufactured products), which are relatively skilled-labor intensive. According to the Stolper-Samuelson theorem, how will this shift affect the real returns to landowners in Japan and the real returns to landowners in the United States? Also explain the impact on the real wage of skilled labor in Japan and the real wage of skilled labor in the United States.
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