Consider a Heckscher-Ohlin model. Two countries, Domestic and Foreign, produce A and B using the production...

 

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Consider a Heckscher-Ohlin model. Two countries, Domestic and Foreign, produce A and B using the production technologies below. Let w = r in both countries. A = LA + 2KA B = 2LB+KB 1.1. Which industry is capital-intensive? 1.2. Suppose KD/LD < KF/LF. Will Domestic export A or B? (1) (2) 1.3. Suppose some workers leave Foreign for Domestic. Will Domestic export A or B? Consider a Heckscher-Ohlin model. Two countries, Domestic and Foreign, produce A and B using the production technologies below. Let w = r in both countries. A = LA + 2KA B = 2LB+KB 1.1. Which industry is capital-intensive? 1.2. Suppose KD/LD < KF/LF. Will Domestic export A or B? (1) (2) 1.3. Suppose some workers leave Foreign for Domestic. Will Domestic export A or B?