xplain how free international trade should lead to the equalisation of factor prices between countries according to the factor price equalisation theorem. Discuss why the theorem does not imply that real Gross Domestic Product per capita will be the same in all countries.

xplain how free international trade should lead to the equalisation of factor prices between countries according to the factor price equalisation theorem. Discuss why the theorem does not imply that real Gross Domestic Product per capita will be the same in all countries.

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter17: Institutions, Policies, And Cross-country Differences In Income And Growth

Section: Chapter Questions

Problem 13CQ

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Question

Explain how free international trade should lead to the equalisation of factor prices between countries according to the factor price equalisation theorem. Discuss why the theorem does not imply that real Gross Domestic Product per capita will be the same in all countries.

Definition Video Definition Overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period. Video

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