Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country H is relatively labor abundant, then once trade begins
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UoH 2014 Question 78: Theories of international trade
Answer and worked solution
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Theories of international trade has come up 151 times in 6 exams since 2006.
What this question tests
This question is on Factor price equalisation and the Stolper-Samuelson theorem, part of Theories of international trade in International Economics.
How trade changes returns to factors and whether it equalises them across countries.
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