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Q. |
If relatively capital-abundant country A opens trade with relatively labor- abundant country B an the trade takes place in accordance with the Heckscher-Ohlin Theorem. What would be the consequence for factor prices (w/r) in the two countries? |
A. | (w/r) rises in A and falls in B |
B. | (w/r) rises in A and also rises in B |
C. | (w/r) falls in A and rises in B |
D. | (w/r) falls in A and also falls in B |
Answer» C. (w/r) falls in A and rises in B |
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