Consider the Specific Factors model of international trade between two countries: US and China. Suppose relative demand is identical in the two countries. Production in each country involves only 2 goods (agricultural and manufacturing) and 3 factors (Labor (L) which is mobile between sectors; Land (T) which is specific to the agricultural sector; and Capital (K) which is specific to the manufacturing sector).
The US has relatively more Capital than does China. Analyze, based on the information above, the qualitative effects that offshore outsourcing from the US manufacturing sector to the manufacturing sector in Chain can have on each of the following variables, holding the relative price of agricultural and manufacturing goods constant) for the US and China:
a) nominal wage
b) real wage
c) profits of the owners of land
d) profits of the owners of capital
e) allocation of labor between the sectors
f) exports
g) imports
Please provide as many graphs (not hand drawn) as possible.