France produces agricultural products and manufactured products, using both labour and capital. When France engages in free trade, it starts exporting manufactured products, which is capital intensive.In the long run, which one of the following scenarios is incorrect?Group of answer choicesFrance remains capital abundant.Real wage in France falls.Real rental in the manufacturing industry increases more than the real rental in the agricultural industry.Allocation of French capital changes compared to autarky.

Italy produces agricultural products and manufactured products, using both labour and capital. Manufacturing is capital-intensive while agriculture is labour-intensive. When Italy engages in free trade, it starts exporting manufactured products. In the long run, which one of the following scenarios is correct? Group of answer choices Italy becomes more capital-abundant. Real rental in the manufacturing industry increases more than the real rental in the agricultural industry. Real wage in Italy falls. Allocation of Italian capital between sectors remains unchanged compared to autarky.

The USA produces agricultural products using land and manufactured products using capital. When the USA engages in free trade, it starts exporting manufactured products, (the price of manufactured products in the US increases). In the short run, which one of the following scenarios takes place? Group of answer choices Both nominal and real returns on land increase Nominal return on land decreases while real return on land remains the same Nominal return on capital increases while real return on capital falls Nominal returns on both land and capital increase Both nominal and real returns on land decrease

Germany produces agricultural and manufactured products. When Germany engages in free trade, it starts exporting manufactured products. What are the predictions of the HO model on changes in real rental?Group of answer choicesNone of the other three optionsReal rental rates decrease in manufacturing sector and increase in agricultural sectorReal rental rates increase in manufacturing sector and decrease in agricultural sectorRental rates are not affected by the transition to free trade

Spain produces cars and ham. It uses labor and capital as production inputs. Spain engages in international trade and starts exporting cars, a capital-intensive good, at the trade equilibrium. In the long run, Spain will experience Group of answer choices increase in real wages and decrease in real rental rates increase in real wages and real rental rates decrease in real wages and increase in real rental rates decrease in real wages and real rental rates

A product is produced in a monopolistically competitive industry with scale economies. If thisindustry exists in two countries, and these two countries engage in trade with each other, then wewould expectA) the country with a relative abundance of the factor of production in which production of theproduct is intensive will export this product.B) the countries will trade only with other nations they are not in competition with.C) the country in which the price of the product is lower will export the product.D) neither country will export this product since there is no comparative advantage.E) each country will export different varieties of the product to the other.