Suppose that there are two factors,capital and land,and that the United States is relatively land endowed while the European Union is relatively capital- endowed.According to the Heckscher- Ohlin model
A)the U.S.should compensate European countries once trade commences.
B)all capitalists in both countries should support free trade.
C)all landowners should support free trade.
D)European landowners should support U.S.- European free trade.
E)European capitalists should support U.S.- European free trade.

Question

Quizplus · Accepted Answer

According to the Heckscher-Ohlin model, countries will export goods that use their abundant factors intensively. Since the European Union is relatively capital-endowed, European capitalists would benefit from free trade as it would increase the demand for capital-intensive goods, thus supporting U.S.-European free trade.

Suppose That There Are Two Factors,capital and Land,and That the United