Refer to above figure. Imagine that the relative capital abundance of Australia was so much greater than that of Sri-Lanka, that we would have to locate Australia far to the right on the K/L axis
If this were so far to the right that there was no area of overlap on the w/r axis, then what product would Australia export? Which product will each of the trade partners export? Will the relative wages as calculated now be the same or different in both Australia and Sri Lanka?
Australia would still export food. As a result of trade, wages will fall in Australia and will rise in Sri-Lanka. However, in this case, the wages in Australia will remain higher than in Sri-Lanka, creating an incentive for migration from the latter to the former country.
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