-Refer to above figure.If trade were to open up between P and R,where would the world terms of trade locate in the figure above (somewhere on the P_C/P_F 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 world terms of trade locate in the figure above (somewhere on the P<sub>C</sub>/P<sub>F</sub> 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 world terms of trade locate in the figure above (somewhere on the P_C/P_F 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