Multiple Choice
In a two-country world, if country A is the relatively labor-abundant and country B is the relatively capital-abundant country by the "price" definition of factor abundance (and where w is the wage rate and r is the return to capital) , then __________. When the countries move from autarky to Heckscher-Ohlin-type trade, the result will be that __________.
A) (w/r) A < (w/r) B; (w/r) A will rise and (w/r) B will fall
B) (w/r) A < (w/r) B; (w/r) A will fall and (w/r) B will rise
C) (w/r) A > (w/r) B; (w/r) A will rise and (w/r) B will fall
D) (w/r) A > (w/r) B; (w/r) A will fall and (w/r) B will rise
Correct Answer:
Verified
Correct Answer:
Verified
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