Question
Assume a two-country, two-commodity, two-input model where the following relationships hold: (K/L) U.S . > (K/L) ROW (K/L) automobiles > (K/L) shoes (K/L) U.S. is
Assume a two-country, two-commodity, two-input model where the following relationships hold:
(K/L)U.S. >(K/L)ROW
(K/L)automobiles> (K/L)shoes
(K/L)U.S.is the capital-labor ratio in the United States, (K/L)ROWis the capital-labor ratio in the Rest of the World, (K/L)automobilesindicates the capital-labor ratio in the production of automobiles, and (K/L)shoesindicates the capital-labor ratio in the production of shoes.
Assume further that technology and tastes are the same in the United States and the Rest of the World. If trade opens up between the United States and the Rest of the World, according to the Heckscher-Ohlin model, the Rest of the World will export _____ and import
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started