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Consider a world where there are two economies, Home and Foreign. Each country produces two goods, computers and desks, using three factors of production: skilled
Consider a world where there are two economies, Home and Foreign. Each country produces two goods, computers and desks, using three factors of production: skilled labor (H), unskilled labor (L), and capital (K). Computers are produced using skilled labor and capital according to the production function = 1 2 1 2 Desks, on the other hand, are produced with unskilled labor and capital with the following production function = 1 2 1 2 The home country is endowed with the following factors: H = 9, K = 20, L = 4. The foreign country is endowed with H = 1, K = 20, L = 4
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