Q2. Briefly discuss the common and different features among the Ricardian, the Specific Factors,
and the Heckscher-Ohlin models. Now taking the Standard Trade Model into account, and based on
the figure shown below, explain the effect of the terms of trade on a nation's welfare. (20 marks)
Quantity
of food, $Q_F$
$D^2$
$D^1$
$D^3$
$Q^1$
$Q^2$
$TT$
$VV^1(P_C/P_F)^1$
$VV^2(P_C/P_F)^2$
Quantity
of cloth, $Q_C$