Economics · International Trade Theories

Consider the following statements regarding the Factor Price Equalisation Theorem (Samuelson, 1948): 1. It is considered an important corollary of the Heckscher-Ohlin model which suggests that trade in goods acts as a substitute for international factor movement. 2. The theorem posits that free trade leads to the equalisation of wages and returns to capital across countries even in the absence of international factor mobility. 3. In capital-abundant countries, the theorem predicts that the demand for labour will rise following trade, thereby increasing wage differentials with labour-abundant countries. Select the correct answer using the code given below: