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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