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Using Cars (a capital-intensive good) and Food (a labor-intensive good). Under the framework of H-O model, show and explain how a decrease in relative price
Using Cars (a capital-intensive good) and Food (a labor-intensive good). Under the framework of H-O model, show and explain how a decrease in relative price of food as a result of trade will impact the income of capital owners relative to labor. What happens to the ratio of capital to labor used in both sectors? Please use a graph with your explanation.
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