Determine whether each of the following statements is true, false or uncertain, and briefly justify your answer (2-3 sentences). Note: No credit will be given for unsupported answers.
Consider a country with two mobile factors of production, capital (K) and labor (L), producing two goods with perfectly mobile factors of production. If trade liberalization causes the relative price of the capital-intensive good to fall in the Home country, then the losses incurred by Home's capital-owners (as measured in terms of consumption possibilities) may exceed the total gains to Home's laborers.
