Consider Figure 4.4A. According to the logic of the Heckscher–Ohlin theory, why is the shape of the U.S. production-possibility curve different from the shape of the production-possibility curve for the rest of the world?

Data From Figure 4.4A

Transcribed Image Text:

FIGURE 4.4 Two Views of Free Trade and Its Effects A. With indifference curves and production-possibility curves Wheat Wheat United States 80 S 50 So 40 T 55 30 Price= 1 WIC 15 Rest of the World 11/2 Price= 0.67 WIC 0 20 40 60 Cloth 0 60 80 100 Cloth 2 WIC 1 WIC B. With demand and supply curves Price of cloth (WIC) Price of cloth (WC) Cloth St exports B Cloth imports 1 0.67 Dus 0 20 40 60 Cloth 0 60 80 100 Cloth