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Canada Question 2 (1 point) In an HO model, suppose that two goods are produced: phones and watches. Phones are capital intensive while watches are labour intensive. Which of the following should occur if Canada suddenly increases its endowment of labour? Assume that prices remain constant. production of phones decreases while production of watches increases More than one choice is correct L/K increases in both sectors Ow/r decreases Question 3 (1 point) In an HO model, suppose that two goods are produced: phones and watches. Phones are capital intensive while watches are labour intensive. Suppose that Thailand is labour-abundant while Canada is capital-abundant. Which of the following should happen to the real income of capital in Canada after opening up to trade with Thailand? increase, because L/K increases decrease, because L/K decreases