In the Factor Proportions Model,the opening to trade will ________ the real return to the country's relatively abundant factor and ________the real return to the country's relatively scarce factor.

Question

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According to the factor proportions model, when a country opens up to trade, the real return to the country's relatively abundant factor increases due to increased demand for that factor, while the real return to the country's relatively scarce factor decreases due to increased competition from the abundant factor. Therefore, the correct option is that the opening to trade will increase the real return to the country's relatively abundant factor and decrease the real return to the country's relatively scarce factor. This is described by choice B.

In the Factor Proportions Model,the Opening to Trade Will ________