-Refer to above figure. If trade were to open up between P and R, where would the 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.

Question

-Refer to above figure. If trade were to open up between P and R, where would the 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.

Quizplus · Accepted Answer

The Answer of 
-Refer to above figure. If trade were to open up between P and R, where would the 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.

-Refer to Above Figure