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Consider the Heckscher-Ohlin model of trade with two countries, two goods, two factors of production (capital and labor). Use a Lerner diagram to demonstrate the
Consider the Heckscher-Ohlin model of trade with two countries, two goods, two factors of production (capital and labor). Use a Lerner diagram to demonstrate the effects of an increase in the price of the capital-intensive good on (i) factor prices and on (ii) output of the two goods. Explain your diagram
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