ecccececece

Question 4 (1 point) In an HO model, suppose that two goods are produced: phones and watches. Phones are capital intensive while watches are labour intensive. Suppose that Thailand is labour-abundant while Canada is capital-abundant. What would factor price equalization say about Canada and Thailand post-trade? Ofactor prices will only ever equalize across countries if we allow capital and labour to move freely across countries after opening up to trade. After opening up to trade, the only way in which each country can benefit from trade is if they do not have the same factor prices. If factor prices are equal across countries before trade, then each country will completely specialize in its comparative advantage good. Post-trade, there is no incentive for capital or labour to move from one country to another because w/r should be the same in both countries. Question 5 (1 point) Look at the following figure from lecture 11: 100 Silk 80 Silkworm Eggs BO Cotton ice since 1851-1853 40 Copper(Mic) 20 Legumes Sake! .Wax Rice