What role do factor intensities of production play in the


1. "Alpha, a country with abundant labor and scarce capital, initially has completely free trade with the outside world. If Alpha imposes a tariff on imports, its ratio of wages to return on capital will rise." Do you agree? Why or why not?

2. What role do factor intensities of production play in the factor proportions theory of trade? If there were no differences in the factor intensities of the goods produced, how could that affect the predicted pattern of trade?

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Econometrics: What role do factor intensities of production play in the
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