Suppose a country makes commodity A and B with capital and labour with constant returns to scale technology. When the country goes from autarky equilibrium to trade equilibrium with its trading partner, the price of A rises and price of B remains same.
a) How will you modify the above scenario so that the trade pattern could be describeed by Ricardian model? describe your answer.
b) How will you modify the above scenario so that the trade pattern could be describeed by Specific Factor model? describe your answer.