Show with graphs. In a two country model with two goods and two factors, both countries...

Show with graphs.

In a two country model with two goods and two factors, both countries have the same technology and equal endowments of labour. Although tastes are homothetic in each country, the ratio of capital- intensive to labour intensive consumption is lower for the foreign than for the home country, at any common set of product prices. If the home country exports capital-intensive good in this equilibrium, which country must have the smaller endowment of capital?

Expert Solution

Rahul Sunny answered 2 years ago

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