Carefully Explain, for Each of the Following Two Statements, Why

question 3

Essay

Carefully explain, for each of the following two statements, why the statement is either TRUE or FALSE.
(a) "In a 2x2x2 Heckscher-Ohlin context, when a relatively labor-abundant country moves from autarky to trade, the real return to capital in the import-competing industry decreases and the real return to capital in the export industry also decreases."
(b) "In the 'specific-factors model,' with capital fixed in each sector, when a relatively labor-abundant country moves from autarky to trade, the real return to capital in the import- competing industry decreases and the real return to capital in the export industry also decreases."

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Definitions:

Sold

The completed action of transferring ownership of goods or services to a buyer in exchange for payment.

Mixed Cost

Mixed cost refers to a cost that contains both variable and fixed cost components, which vary depending on the level of activity.

Utility Costs

Expenses incurred for essential services such as electricity, water, gas, and sewage.

Supervisory Salaries

Compensation paid to employees who oversee the work of other employees; it is considered a part of indirect labor costs in manufacturing settings.