In terms of the factor-endowment model of Heckscher and Ohlin
A) the abundant factor gains from trade
B) the scarce factor gains from trade
C) those disadvantaged by trade outnumber those advantaged by trade
D) everyone necessarily benefits from trade

Question

Quizplus · Accepted Answer

According to the factor-endowment model, the country with relatively abundant factor (capital or labor) in production gains from trade by exporting the goods that use that factor intensively and import goods that use the other factor intensively. This results in an increase in the reward (wage or interest rate) of the abundant factor in that country, thus benefiting the owners of that factor. Therefore, the abundant factor gains from trade.

In Terms of the Factor-Endowment Model of Heckscher and Ohlin