Question: ( a ) Consider a standard Heckscher - Ohlin ( HO ) Model, where two countries Home and Foreign produce two goods, sugar and milk,

(a) Consider a standard Heckscher-Ohlin (HO) Model, where two countries Home and Foreign produce two goods, sugar and milk, using labour
(L) and capital (K). Home is relatively labour abundant and Foreign is relatively capital abundant. Assume that sugar is relatively capital intensive and milk is relatively labour intensive. Answer the following questions:
(i) Discuss the pattern of trade between the two countries.
Under what condition(s) factor price equalization may be obtained? Discuss with help of a diagram showing the segment of equalization.
Draw the graphs

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