Canada and the United States Produce Computers and Chemicals Using

Multiple Choice

Canada and the United States produce computers and chemicals using labor and capital as the only inputs in production. The United States is capital abundant, and Canada is labor abundant. Computer production is more labor intensive than chemical production in both countries. What does the Heckscher-Ohlin model predict will happen to prices of computers or chemicals in the two countries?

A) The price of chemicals should rise in the United States.
B) The price of chemicals should fall in the United States.
C) The price of computers should fall in Canada.
D) The price of chemicals should rise in Canada.