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Consider the following data on two countries, A and B: _- 1994 Population (millions of persons) Capital stock per worker (S mils, 2005) Use the
Consider the following data on two countries, A and B: _- 1994 Population (millions of persons) Capital stock per worker (S mils, 2005) Use the Hecksher-Ohline model to answer the following: a. Which country is capital abundant & why? b. Which country is labor abundant & why? c. Supposing that good T (toupes) is labor intensive relative to good B (bowler hats), which country will have a comparative advantage in the production of T? d. Which factors gain 8: which lose in real terms when trade is opened between the two countries? Explain your answer using graphs & logical reasoning
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