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In: Economics

Situation: Suppose there are two countries, Germany and India, and two goods, bicycles and textiles. Germany...

Situation: Suppose there are two countries, Germany and India, and two goods, bicycles and textiles. Germany has a resource endowment of 42,444,325 units of labor and 8,873,941 million units of capital, while India has a resource endowment of 475,090,729 units of labor and 10,299,894 million units of capital. Each bicycle requires 100 units of capital and 10 units of labor to produce, and each unit of textiles requires 40 units of capital and 2 units of labor to produce.

Question: Which country will export which good once these countries open up to trade?

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