Question 3


within a model of two countries using two factors to produce two goods, the endowment of each factor and the technology for producing food are the same for both countries.    In producing cloth, however, the forien country is Hicks-neutrally twice as the home country.  At the same time, although the income elasticity of demand for each good equals 1 in both countries, the food/close ratio in consumption is twice as high for the home as for the foreign country at any set of product prices.  In free - trade equilibrium, which country exports food?