
We are now in a position to state the theorem:"Suppose that two countries have free trade,
perfect competition and no distortions; they have the same CRTS technology without factor
intensity reversals, and both countries are incompletely specialized in a trade equilibrium. In
this case, the real return to each factor is the same in both countries.
The theorem implies that trade in commodities eliminates any motivation for trade in factors."
given above info....answer this...
the necessary and sufficient condition for factor price equalization in ho model is:
a.factor intensity reversals
b.incomplete specialization
c. nonCRTS technology
d. dissimilar production function
