Which of the following is true?
A)In the HO model complete specialization in the production of exports is a likely outcome of international trade.
B)In the classical model, complete specialization seldom occurs due to the assumption of increasing opportunity costs.
C)Complete specialization is more likely if opportunity costs change little as the production point moves closer to either axis.
D)All of the above are true.

Question

Quizplus · Accepted Answer

In the HO model, complete specialization is not a likely outcome due to the assumption of different factor endowments in different countries. In the classical model, complete specialization seldom occurs due to the assumption of increasing opportunity costs. However, if opportunity costs change little as the production point moves closer to either axis, then complete specialization becomes more likely. Therefore, option C is the correct answer.

Which of the Following Is True