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Suppose country H engages in trade and observes an increase in the relative price such the the autarky price is greater than the trade price,
Suppose country H engages in trade and observes an increase in the relative price such the the autarky price is greater than the trade price, ie. PA>P*. Assume the country uses two factors of production, labour and capital, to produce two goods, X and Y. Assume that X is labour intensive. In such a case, we expect wages to Group of answer choices fall proportionally more than either goods price but fall relative to the rental rate of capital. rise proportionally more than either goods price but fall relative to the rental rate of capital. rise proportionally more than either goods price or the rental rate of capital. fall proportionally more than either goods price or the rental rate of capital
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