The H-O model is a general equilibrium model because it deals with:
A)production in both nations
B)consumption in both nations
C)trade between the two nations
D)all of the above

Question

Quizplus · Accepted Answer

The H-O model deals with production in both nations through the use of factor endowments and technology, consumption in both nations through the determination of prices, and trade between the two nations through the exchange of goods and services. Therefore, it is a general equilibrium model that takes into account all of these factors to determine the overall outcome for both nations in the model.

The H-O Model Is a General Equilibrium Model Because It