Consider a Heckscher-Ohlin (H-O) model in which the two countries are the United States (USA) and China (CHN); the two factors of production are skilled labor or “human capital” (H) and ordinary labor (L), which receive wages WH and WL; the two goods are jet airplanes (A) and electronic devices (E). You may assume that USA is skilled-labor (H) abundant.
Draw the relative demand (RD) for skilled labor curves for the two goods (Hint: put relative factor supplies H/L on the horizontal axis, and the relative wage WH/WL on the vertical axis). Which one is further to the right, RD for airplanes (A) or electronics (E)?
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