Heckscher-Ohlin Theorem: Suppose Azerbaijan and Georgia produce meat and potatoes. Azerbaijan is capital-abundant than Georgia (Scarce factor in Azerbaijan is land, and in Georgia it is capital). Suppose meat production is relatively more capital-intensive. When the two countries will open up borders and start trading with one another, please indicate in the boxes below, what is likely to happen to the variables after the trade Write + the variable increases; - if the variable decreases; 0 if the variable does not change; A if the direction of change is unknown. VARIABLES AZERBAIJAN GEORGIA The relative price of meat (Pm/Pp) Output of meat Output of potatoes Exports of meat Exports of Potatoes Imports of meat Imports of Potatoes Income of landowners in Azerbaijan Income of capital owners in Georgia Wages
Heckscher-Ohlin Theorem: Suppose Azerbaijan and Georgia produce meat and potatoes. Azerbaijan is capital-abundant than Georgia (Scarce factor in Azerbaijan is land, and in Georgia it is capital). Suppose meat production is relatively more capital-intensive. When the two countries will open up borders and start trading with one another, please indicate in the boxes below, what is likely to happen to the variables after the trade
Write + the variable increases; - if the variable decreases; 0 if the variable does not change; A if the direction of change is unknown.
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VARIABLES |
AZERBAIJAN |
GEORGIA |
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The relative price of meat (Pm/Pp) |
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Output of meat |
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Output of potatoes |
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Exports of meat |
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Exports of Potatoes |
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Imports of meat |
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Imports of Potatoes |
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Income of landowners in Azerbaijan |
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Income of capital owners in Georgia |
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Wages |
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