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Suppose we have a Heckscher-Ohlin-Samuelson model with two countries, two goods, and capital and labour. No government is taxing or transferring income or goods across
Suppose we have a Heckscher-Ohlin-Samuelson model with two countries, two goods, and capital and labour. No government is taxing or transferring income or goods across households within their country. Answer True, False, or Uncertain to each statement below. Briefly justify your answers in a few sentences. (A) When the two countries open for trade, workers in the relatively labour abundant country will definitely gain from trade. (B) Without more information, we cannot determine if each country experiences aggregate gains from trade -- it depends on the size of the gains to the households that gain from trade relative to the size of the losses to the households that lose from trade
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