2. (8 points) Table 1 gives the factor prices in U.S. and U.K., and Table 2 gives the production requirements of commodity X and Y in the two nations. Answer the following questions. Table 1 Interest rate Wage rate $3/hour 5% $20/hour 3% U.S. U.K. Table 2 U.S. U.K. Capital Labor Capital Labor 3 2 3 3 2 2- 12 Commodity X Commodity Y A. (2 points) Which nation is capital-abundant? Which nation is labor-abundant? - B. (2 points) In each nation, which commodity is capital-intensive? Which commodity is labor-intensive? C. (2 points) According to the Heckscher-Ohlin theorem, how should each nation specialize in production and which country is expected to export commodity X? D. (2 points) According to the Stolper-Samuelson theorem, labor unions in which country will be in favor of free trade? Explain briefly (1-2 sentences should be sufficient). 2. (8 points) Table 1 gives the factor prices in U.S. and U.K., and Table 2 gives the production requirements of commodity X and Y in the two nations. Answer the following questions. Table 1 Interest rate Wage rate $3/hour 5% $20/hour 3% U.S. U.K. Table 2 U.S. U.K. Capital Labor Capital Labor 3 2 3 3 2 2- 12 Commodity X Commodity Y A. (2 points) Which nation is capital-abundant? Which nation is labor-abundant? - B. (2 points) In each nation, which commodity is capital-intensive? Which commodity is labor-intensive? C. (2 points) According to the Heckscher-Ohlin theorem, how should each nation specialize in production and which country is expected to export commodity X? D. (2 points) According to the Stolper-Samuelson theorem, labor unions in which country will be in favor of free trade? Explain briefly (1-2 sentences should be sufficient)