Q. If relatively capital-abundant country A opens trade with relatively labor- abundant country B an the trade takes place in accordance with the Heckscher-Ohlin Theorem. What would be the consequence for factor prices (w/r) in the two countries? (Solved)
1. (w/r) rises in A and falls in B
2. (w/r) rises in A and also rises in B
3. (w/r) falls in A and rises in B
4. (w/r) falls in A and also falls in B
- c. (w/r) falls in A and rises in B