Heckscher-ohlin model

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Heckscher-Ohlin Model.

Suppose the production of cloth is labour intensive and the production of food is land intensive and suppose the United States (US) is labour abundant and Canada is land abundant.

(a) Which country will have the lower price of cloth PC relative to the price of food PF (assume PF =1 in both countries) if the two countries do not engage in international trade?

(b) Which country has the lower wage rate assuming the two countries do not engage in international trade

Reference no: EM132324876

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