Suppose there are two goods being produced in the economy:

| November 24, 2016

Suppose there are two goods being produced in the economy: robots and wheat. Robots are a capital intensive good and wheat is a labor intensive good. Suppose that there are two countries: France and Brazil. France is capital abundant and Brazil is labor abundant. Using two graphs (one per country) draw the international trade equilibrium for this two country world economy based on the Heckscher-Ohlin model.

Be sure to include (1) the production possibility frontiers, (2) the relative price line, (3) indifference curves and (4) trade triangles. Completely label both graphs for full credit.

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