Essay
-Refer to above figure. If trade were to open up between P and R, where would the terms of trade locate in the figure above (somewhere on the PC/PF axis)?
Would relative wages (w/r) in the two countries become equal?
Is this consistent with the Heckscher-Ohlin model?
Explain.
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The terms of trade would settle somewher...View Answer
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Correct Answer:
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