According to the Factor Proportions (H-O) model of international trade, in which good does Autarkistan have a comparative advantage? Again, suppose that Autarkistan opens up to free international trade with the world. Using the H-O model, what will happen to the real wage of labor in the machine industry in Autarkistan?
According to the Factor Proportions (H-O) model of international trade, in which good does Autarkistan have a comparative advantage? Again, suppose that Autarkistan opens up to free international trade with the world. Using the H-O model, what will happen to the real wage of labor in the machine industry in Autarkistan?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The country of Autarkistan is currently closed off from the world and engages in no international trade. Like the rest of the world, it produces and consumes (only) two goods, textiles and machines, using labor and capital. The textile industry employs more labor, per unit of capital, than does the machine industry. Being poor, Autarkistan has far less capital per worker than does the rest of the world.
According to the Factor Proportions (H-O) model of international trade, in which good does Autarkistan have a
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