Which one of the following is NOT an assumption made in the standard 2x2x2 Heckscher-Ohlin analysis?
A) The production function for a given good is the same in both countries.
B) If a particular good is the relatively labor-intensive good at one set of relative factor Prices, then it is also the relatively labor-intensive good at any other set of relative Factor prices.
C) A given relative commodity price ratio, say (PX/PY) 1, can be associated with more than One relative factor price ratio, e.g., say with (w/r) 1 as well as with (w/r) 2.
D) Tastes and preferences (i.e., the community indifference curve maps) are identical in the two countries.
Correct Answer:
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