Question: Consider the Heckscher-Ohlin model discussed in class. You are given the following data on the factor endowments of the two countries, A and B: Country

Consider the Heckscher-Ohlin model discussed in class. You are given the following data on the factor endowments of the two countries, A and B: Country A Labour Force (millions of workers) 45 Country B Labour force 20 Country A Capital Stock (thousands of machines) 15 Country B Capital stock 10 a) Which country is relatively capital abundant? Explain. b) Which country is relatively labour abundant? c) Suppose that steel is capital intensive relative to T-shirts. Which country will have a comparative advantage in the production of steel? Explain. d) Which factor benefits the most in country B under international trade? Why?

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