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 the
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 United States will export _____ and import
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