Which of the following is an assertion of the Heckscher- Ohlin model?
A)An increase in a country's labor supply will increase production of the labor- intensive good and decrease production of the capital- intensive good.
B)In the long run,labor is mobile and capital is not.
C)Factor endowments determine the technology that is available to a country,which determines the good in which the country will have a comparative advantage.
D)Factor price equalization will occur only if there is costless mobility of all factors across borders.
E)An increase in a country's labor supply will increase production of both the capital- intensive and the labor- intensive good.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model asserts that an increase in a country's labor supply will lead to an increase in the production of the labor-intensive good and a decrease in the production of the capital-intensive good, as the country will specialize more in the good that uses its abundant factor more intensively.

Which of the Following Is an Assertion of the Heckscher-