Chapter 20, Problem 3P

To determine

What prediction does the Heckscher-Ohlin model make about wages received by labor in China.

Concept Introduction:

Heckscher-Ohlin Model: The Heckscher-Ohlin Model states that a country exports the goods which are produced with the use of factors that are abundantly available within the country and imports the goods which are produced with the use of factors that are scarce in the country.

Comparative Advantage: The comparative advantage theory of international trade states that a country shall have a comparative advantage over the production of a good or service if its opportunity cost is lower as compared to another country.