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 trade model asserts that a country will export the goods for which it has the most abundant and suitable resources. This is the idea of comparative advantage, which determines the division of labor and allocation of resources among nations. It is not based on absolute advantage or limited by the size of the world market.

The Trade Model of the Swedish Economists Heckscher and Ohlin