The trade model of the Swedish economists Heckscher and Ohlin maintains that
A) absolute advantage determines the distribution of the gains from trade.
B) comparative advantage determines the distribution of the gains from trade.
C) the division of labor is limited by the size of the world market.
D) a country exports goods for which its resource endowments are most suited.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model suggests that countries will export goods that utilize their abundant and cheap factors of production, and import goods that require factors of production that are scarce and expensive domestically. This means a country exports goods for which its resource endowments (like labor, land, and capital) are most suited.

The Trade Model of the Swedish Economists Heckscher and Ohlin