Constant returns to scale technology

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Reference no: EM13150147

SCENARIO: Suppose a country makes commodity A and B with capital and labour with constant returns to scale technology. When the country goes from autarky equilibrium to trade equilibrium with its trading partner, the price of A rises and price of B remains same.
a) How will you modify the above scenario so that the trade pattern could be explained by Ricardian model? Explain your answer.
b) How will you modify the above scenario so that the trade pattern could be explained by Specific Factor model? Explain your answer

Reference no: EM13150147

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