Trade based on comparative advantage benefits both countries

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Questions.

1. Trade based on comparative advantage benefits both countries. The distribution of gains from trade across countries depends on the terms of trade. Do you agree? Why?

2. Suppose that France is capital abundant while China is labor abundant. Both countries have the same tastes and produce soybeans which is capital intensive and tea which is labor intensive. What does the Heckscher-Ohlin theory postulate about the pattern of trade between France and China and why?

Reference no: EM133392555

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