Question: Consider a Heckscher-Ohlin-Samuelson model of trade with two LARGE countries: Home (H) and Foreign (F); two goods: amplifiers (A) and bananas (B) and two factors
Consider a Heckscher-Ohlin-Samuelson model of trade with two LARGE countries: Home (H) and Foreign (F); two goods: amplifiers (A) and bananas (B) and two factors of production: high-skilled labour (S) and low-skilled labour (L). Country H is relatively abundant in high-skilled labour. Amplifier production is 2 relatively intensive in high-skilled labour. For this economy we can use analogs of the relative labour (to capital) demand and supply diagrams we used in class which, for this question, will be relative high-skilled labour (to low-skilled labour) demand and supply diagrams. Draw a schematic version of the relative high-skilled labour demand and supply diagram to depict the free-trade equilibrium, which depicts the free trade skilled wage gap between high-skilled and low-skilled workers, (wS/wL) o , in each country
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