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Consider the following Heckscher-Ohlin model. Portugal has 700 workers and 600 units of capital, and France has 1800 workers and 1200 units of capital. Technology
Consider the following Heckscher-Ohlin model. Portugal has 700 workers and 600 units of capital, and France has 1800 workers and 1200 units of capital. Technology is identical in both countries. Wine is capital intensive and cloth is labor intensive. 24 points (5). Going from no-trade to free-trade, the capital-labor ratio increases for wine in Portugal. (6). Going from no-trade to free-trade, the marginal product of labor increases for cloth in Portugal. (7). French workers support free trade. (8). Portuguese workers are opposed to placing restrictions on trade. (9). Going from no-trade to free-trade, the real income of Portuguese capitalists in terms of wine decreases
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