Answer to Question #247319 in Macroeconomics for shina

Question

explain the applicability of the Stolper-Samuelson theorem for predicting terms of trade in two countries.

Answer 1

The Stolper-Samuelson theorem states that in a two-commodity, two-factor country, an ad valorem import tariff will result in a greater than proportionate rise in the price of the matching "intensive" element in that industry.