Question: Consider the Heckscher-Ohlin-Samuelson model with two goods, A and B; two factors of production, capital and labour; and two countries, H and F. Good A
Consider the Heckscher-Ohlin-Samuelson model with two goods, A and B; two factors of production, capital and labour; and two countries, H and F. Good A is relatively labour intensive and Country H is relatively labour abundant. Let V_A denote the labour to capital ratio in industry A and let V_B denote the labour to capital ratio in industry B. When Country H moves from autarky to trade, what will happen to the labour to capital ratio in each industry in Country H? Question 7 options: Both V_A and V_B will decrease. V_A will decrease and V_B will increase. Both V_A and V_B will increase. V_A will increase and V_B will decrease
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