Consider the Heckscher-Ohlin Model. Suppose there are two countries, Home and Foreign, two goods, Good A and Good B, and two factor inputs capital and labor. Suppose Home is more labor abundant than the Foreign and Good A is more capital intensive than Good B. (c) Draw a figure showing the relationship between relative demand and relative supply of Good A versus Good B in the Home country and the Foreign. Denote the relative supply curve as RS at Home and RS* in the Foreign, and the relative demand curve as RD.
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