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| Q. |
Countries H and F operate in an H-O world. Each country produces two goods, A and B. Good A is relatively capital intensive and country F is relatively labor abundant. Suppose however, that the production technology is not the same in the two countries. That is, H has a superior technology of production compared to F. |
| A. | Free trade will equalize wages between the two countries |
| B. | In free trade, there will be no incentive for migration of labor from H to F. |
| C. | In free trade there will be some incentive for workers from F to migrate to H. |
| D. | Both b. and c. |
| Answer» D. Both b. and c. | |
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