Statement I: The Rybczynski theorem postulates that at constant commodity prices an increase in the endowment of one factor will increase by a greater proportion the output of commodity, intensive in that factor and will reduce the output of the other country
Statement II: The Stolper - Samuelson theorem postulates that an increase in the relative price of a commodity (for example as a result of a tariff) decreases the return or earnings of the factor used intensively in the production of the commodity
Choose the correct answer
1
Both are true
2
Both are false
3
I is true II is false
4
I is correct II is true