-Refer to Above Figure

question 13

Essay

-Refer to above figure.If trade were to open up between P and R,where would the world terms of trade locate in the figure above (somewhere on the PC/PF axis)? Would relative wages (w/r)in the two countries become equal? Is this consistent with the Heckscher-Ohlin model? Explain.

---

Definitions:

Final Agreed Upon Price

The last price that all parties involved in a negotiation consent to, marking the completion of the negotiation process.

Zero-Sum Situation

A zero-sum situation is a scenario in economic theory or game theory where one participant's gain or loss is exactly balanced by the losses or gains of the other participants.

Distributive

Pertains to the allocation or distribution of resources among parties in a negotiation or decision-making context.

Interdependent Parties

Entities or individuals that are mutually reliant on each other, often for resources or outcomes.