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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