The HO model predicts that once trade begins factor prices will equalize between countries.This result occurs because of the assumption of
A)identical technology sets available to each country.
B)constant opportunity costs.
C)one factor of production.
D)free international mobility of factors.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin (HO) model assumes identical technology sets available to each country, which is a key reason for the prediction that factor prices will equalize between countries once trade begins. This assumption allows for the efficient allocation of resources based on comparative advantage, leading to similar production techniques and thus factor price equalization.

The HO Model Predicts That Once Trade Begins Factor Prices