shift the production possibility curve outward and decrease the production of the capital-intensive product.
In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border would
relative availabilities of factors of production.
In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in
technology
One way in which the Heckscher-Ohlin model differs from the Ricardo model of comparative advantage is by assuming that ________ is (are) identical in all countries.
the opportunity cost of product S in terms of product T.
The slope of a country?s PPF reflects
has two factors of production.
The Heckscher-Ohlin model differs from the Ricardian model of Comparative Advantage in that the former
?A good cannot be both land- and labor-intensive.?
In a two good, two factor model, such as the original Heckscher-Ohlin framework, the factor intensities are relative intensities. Hence, the relevant statistic is either workers per acre (or acres per
worker); or wage per rental unit (or rental per wage).
?No country is abundant in everything.?
the concept of relative (country) factor abundance is (like factor intensities) a relative concept. When we identify a country as being capital intensive, we mean that it has more capital per worker than does
the other country. If one country has more cap
the relatively abundant factor of production.
In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade will benefit the owners of
factor endowments.
According to the Heckscher-Ohlin model, the source of comparative advantage is a country?s
factor of production
The Hechscher-Ohlin model states that a country will have a comparative advantage in the good or service whose production is relatively intensive in the ________ with which the country is relatively abundant
the gainers could compensate the losers and still retain gains.
According to the Hecksher-Ohlin model,
countries will not be fully specialized in one product.
As opposed to the Ricardian model of comparative advantage, the assumption of diminishing returns in the Heckscher-Ohlin model means that the probability is greater that with trade
Differences in technologies could be the source of gains from trade.
Which of the following is false (for the Heckscher-Ohlin model)?
the direction of trade (who exports what to whom).
If tastes differed between countries, this could affect
Countries differ in their technologies.
The following are all assumptions that must be accepted in order to apply the Heckscher-Ohlin Theory, except for one
B) the capital rich country will charge the same price for the capital intensive good as that paid for it by the capital poor country.
In international-trade equilibrium in the Heckscher-Ohlin model,
The Factor Price Equalization Theorem
If two countries were very different in their relative factor availabilities, then we would not expect which of the following to be empirically supported?
the world price of the land intensive product would be higher than it had been in Australia.
If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade were to open up between these two countries,
the real income of landowners in Belgium would fall.
If Australia has more land per worker, and Belgium has more capital per worker, then if trade were to open up between these two countries,
it increases society?s consumption choices.
The reason trade clearly benefits a country is that
Not enough information given.
If Gambinia has many workers but very little land and even less productive capital, then, following the specific factor model, we know that Gambinia has a comparative advantage in
not resort to protectionism.
If, relative to its trade partners, Gambinia has many workers but very little land and even less productive capital, then, following the specific factor model, in order to help the country?s economic welfare, the
Gambinian government should
International trade leads to complete equalization of factor prices
This statement is typically ?true . . . but.? Under a strict and limited set of assumptions, such as the original Heckscher-Ohlin model which excludes country specific technologies; non- homothetic
tastes; factor intensity reversals; large country differe
Why is the H.O. model called the factor-proportions theory?
The H.O. model explores the nature and the limitations of assuming that the sole determinant of comparative advantage is inter-country differences in (relative) factor proportions.