Provide brief answers to the following questions. Make sure to use appropriate graphs when necessary. You may upload scanned graphs to the space provided.

a)Explain the Stolper-Samuelson theorem. (5points)

b)What is the prediction of the factorprice equalization theorem (FPE)? Moreover, explain the five main reasons why we do not observe factor price equalization in the real world. (10 points)

c)Assuming trade is determined by the HO model, show how an increase in the labour supply of a small open economy (SOE) could either increase or decrease the volume of trade. (10 points)