Which of the following statements is TRUE?
A)The HeckscherOhlin model offers a reasonable explanation of the pattern of trade and the gains from
Trade.
B)The HeckscherOhlin trade model does not offer an explanation of the pattern of trade.
C)The HeckscherOhlin trade model does not offer an explanation of the gains from trade.
D)The Riparian trade model (with labor as the only input) offers a better explanation of the pattern of trade and the
Gains from trade than the HeckscherOhlin model.

Question

Which of the following statements is TRUE?
A)The Heckscher­Ohlin model offers a reasonable explanation of the pattern of trade and the gains from
Trade.
B)The Heckscher­Ohlin trade model does not offer an explanation of the pattern of trade.
C)The Heckscher­Ohlin trade model does not offer an explanation of the gains from trade.
D)The Riparian trade model (with labor as the only input) offers a better explanation of the pattern of trade and the
Gains from trade than the Heckscher­Ohlin model.

Quizplus · Accepted Answer

The Heckscher-Ohlin model is a widely accepted trade theory that explains the pattern of trade and the gains from trade based on countries having different factor endowments. It argues that a country will export goods that require its abundant factor of production and import goods that require its scarce factor of production. This leads to more efficient resource allocation and increased overall welfare for trading countries. The model has empirical support and is commonly used by policymakers to make trade-related decisions. B, C, and D are incorrect because they do not acknowledge the widely accepted nature and empirical evidence of the Heckscher-Ohlin model.

Which of the Following Statements Is TRUE