Which of the following is a critical element of the Heckscher-Ohlin model?
A)That different goods display different factor intensities in their production.
B)That some countries have no comparative advantage in anything.
C)That trade may not be beneficial.
D)All of the above.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model is based on the assumption that different goods require different types and levels of inputs, or factors of production, such as labor, capital, and land. This means that the relative endowments of different factors in different countries will determine their pattern of trade. Therefore, the critical element of the model is the idea that different goods display different factor intensities in their production. Option B is incorrect because the Heckscher-Ohlin model assumes that all countries have at least one factor in abundance, meaning they will have a comparative advantage in producing a certain good. Option C is also incorrect because the model assumes that trade can be beneficial, in terms of increasing efficiency and output.

Which of the Following Is a Critical Element of the Heckscher-Ohlin