Question: This is the Stolper-Samuelson result. The rise in the relative price of a good leads to an increase in the returns to the factor used

This is the Stolper-Samuelson result. The rise in the relative price of a good leads to an increase in the returns to the factor used intensively in it sproduction and a decrease in the return to the other factor. In this case, the price of motorcycles went up compared to autarky, and so the returns to labor rise and the returns to capital fall. So labor has a higher real wage (welfare increases) and capital has a lower real rental rate (welfare decreases)

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