Consider the UK and Romania, producing and trading capital-intensive cars and labour-intensive
textiles. Technology is the same in both countries, while the UK is capital abundant relative to
Romania (which is labour abundant). Consider a scenario under which car-producing
multinationals leave the UK to open new plants in Romania, which entails capital flows from the
former to the latter. Then: a. none of the others b. trade between the UK and Romania falls and
capitalists lose welfare, while workers gain in both countries c. trade between the UK and
Romania falls and capitalists gain welfare, while workers lose in both countries d. trade between
the UK and Romania increases and capitalists lose welfare, while workers gain in both countries.
Consider the UK and Romania producing and trading capitali.pdf
1. Consider the UK and Romania, producing and trading capital-intensive cars and labour-intensive
textiles. Technology is the same in both countries, while the UK is capital abundant relative to
Romania (which is labour abundant). Consider a scenario under which car-producing
multinationals leave the UK to open new plants in Romania, which entails capital flows from the
former to the latter. Then: a. none of the others b. trade between the UK and Romania falls and
capitalists lose welfare, while workers gain in both countries c. trade between the UK and
Romania falls and capitalists gain welfare, while workers lose in both countries d. trade between
the UK and Romania increases and capitalists lose welfare, while workers gain in both countries
