Using the HO model,assume that the United States is capital abundant and Mexico is labor abundant.If soybeans are capital intensive and avocados are labor intensive,
A)Mexico will produce more soybeans once trade is introduced.
B)the United States will produce more avocados once trade is introduced.
C)avocado prices in the United States will fall once trade begins.
D)soybean prices in Mexico will rise once trade begins.

Question

Quizplus · Accepted Answer

According to the Heckscher-Ohlin (HO) model, countries will specialize in producing goods that use their abundant resources more intensively. The U.S. will specialize in capital-intensive soybeans, and Mexico in labor-intensive avocados. As a result, avocado prices in the U.S. will fall due to increased imports from Mexico.

Using the HO Model,assume That the United States Is Capital