Consider an Economy A that produces two goods, avocados and trucks. We have the following data from Economy A:

Avocados:

Sales revenue = 250

Earnings of labor = 125

Earnings of capital = 125

Percentage increase in price after trade = 0%

Trucks:

Sales revenue = 250

Earnings of labor = 25

Earnings of capital = 225

Percentage increase in price after trade = 40%

3.1. Which industry is more labor-intensive? How do you know?

3.2. Given the percentage changes in output prices in the data provided, calculate the percentage change in the rental on capital. (6 points)

3.3. How does the magnitude of this change compare with that of labor? (3 points)

3.4. Which factor gains in real terms, and which factor loses? Are these results consistent with the Stolper-Samuelson theorem? (4 points)