In the Heckscher–Ohlin Model, as trade occurs in a capital-abundant country, increased imports will force domestic import-competing firms to decrease price and production. Labor and capital will move to exporting firms. What will then happen to wages and returns to capital?

(Figure: Home and Foreign Autarky Equilibria) H-O S and C(1).jpg According to the shapes of the two PPFs, which nation has a comparative advantage in the production of computers?

Latvia.jpg Refer to the above table. According to the Heckscher–Ohlin model, Latvia’s capital–labor ratios are consistent with:

The implication of resources being mobile domestically is that:

Leontief suggested that his results were not a paradox once we account for differences in:

relative demand(1).jpgRefer to the figure above: Economy-wide Relative Supply and Relative Demand for Labor. Assume computer industry is capital-intensive, and shirt industry is labor-intensive. Assume further that home country is capital abundant country. As trade is opened up,

The Heckscher–Ohlin model assumes that there are two countries, each of which produces two goods (say manufactures and agriculture) using labor and capital. Which of the following is an additional assumption of the Heckscher–Ohlin model?

In the long run, an increase in FDI in the manufacturing sector will __________ the return to capital in the ____________ sector(s).

LCD TVs are capital intensive, and tennis racquets are labor intensive. Suppose Canada has $100 billion of capital and 2 million workers and Mexico has $10 billion of capital and 20 million workers. According to the Heckscher–Ohlin model:

Use the Heckscher-Ohlin model of trade. Japan and China produce cars and shirts using two factors, capital and labor, that are mobile across sectors. Cars are capital-intensive. Shirts are labor-intensive. The country-wide capital-labor ratio is higher in Japan than in China. Compared to the autarky equilibrium, under free trade the economy wide relative demand curve for labor/capital in China should shift _______ and the wage relative to the rental should ______.