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Home and Foreign are two identical countries except that people in Home work twice as hard of those in Foreign. Each has two industries (Steel and Shoe industries), where steel production is capital intensive and shoe production is labor intensive. Under the standard Hecksher-Ohlin model with two factors of production (L, K), what would be your prediction of the patterns of trade between these two countries? What do we know about wage rates before and after trade in these two countries?

Business Economics, Economics

  • Category:- Business Economics
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