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-Refer to Above Figure

Question 11

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-Refer to above figure.If trade were to open up between P and R,where would the world terms of trade locate in the figure above (somewhere on the P<sub>C</sub>/P<sub>F</sub> axis)? Would relative wages (w/r)in the two countries become equal? Is this consistent with the Heckscher-Ohlin model? Explain.
-Refer to above figure.If trade were to open up between P and R,where would the world 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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