“Free trade between two countries in H O model will equalize relative factor prices provided there is incomplete specialization.” This is

Related MCQs

• Country A has 100 units of labor and Country B has 200 units of labor. Both countries produce computers and Web pages. The unit labor requirements are given in the table below: Computers Web pages Country A 50 1 Country B 100 1 Assume free trade exists and that the relative price is such that both countries specialize completely in the industry in which they have a comparative advantage (neither country produces both goods). The supply of computers relative to Web pages will be:
• If a commodity is classified as "labor-intensive" at one set of relative factor prices but "capital-intensive" at another set of relative prices, this situation is known as
• According to the Heckscher - Ohlin model, if the United States is richly endowed in human capital relative to Mexico, then as NAFTA increasingly leads to more bilateral free trade between the two countries,
• 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?
• Country A and Country B produce computers and Web sites. The unit labor requirements are given in the table below: Computers Web pages Country A 50 1 Country B 100 1 At which of the following relative prices (computers in terms of Web sites) will Country B produce both goods under free trade?
• In the Ricardian model, when two countries trade freely, the relative price of the goods they are trading is determined by:
• As a result of trade, specialization in the Ricardian model tends to be
• Trade between two countries can benefit both countries if
• In free trade between two countries in an H-O world:
• The Heckscher-Ohlin model rules out the classical model’s basis for trade by assuming that________ is (are) identical between countries.