Based on heckscher online theorem. As a labor abundant country exports the labor

Question

Based on heckscher online theorem. As a labor abundant country exports the labor intensive good X and imports the capital intensive good y from a capital abundant country.
A. Wage difference between the two countries narrow B. Difference in returns to capital between the two countries narrow C. Price difference in good X in the two countries narrow D. Price difference in good y on the two countries narrow E. All of above Based on heckscher online theorem. As a labor abundant country exports the labor intensive good X and imports the capital intensive good y from a capital abundant country.
A. Wage difference between the two countries narrow B. Difference in returns to capital between the two countries narrow C. Price difference in good X in the two countries narrow D. Price difference in good y on the two countries narrow E. All of above
A. Wage difference between the two countries narrow B. Difference in returns to capital between the two countries narrow C. Price difference in good X in the two countries narrow D. Price difference in good y on the two countries narrow E. All of above

Explanation / Answer

All of the above is correct

Once trade is allowed, profit-seeking firms will move their products to the markets that have (temporary) higher price. As a result:

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