This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider

This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of handmade rugs and assembly line robots in Canada and India. a. Which country would you expect to be relatively labor-abundant, and which is capital-abundant? Why? b. Which industry would you expect to be relatively labor-intensive, and which is capital-intensive? Why? c. Given your answers to (a) and (b), draw production possibilities frontiers for each country, with the output of robots on the x-axis and the output of rugs on the y-axis. Assuming that consumer preferences are the same in both countries, add indifference curves and relative price lines (without trade) to your PPF graphs. What do the slopes of the price lines tell you about the direction of trade? Your graphs need to be carefully labelled.