Consider two products, automobiles and shoes.If shoes are
Labor intensive and automobiles are capital intensive, what
Will happen under the HO model?
A)The laborabundant country will export automobiles.
B)The capitalabundant country will export shoes.
C)The laborabundant country will import shoes.
D)The capitalabundant country will import shoes.

Question

Consider two products, automobiles and shoes.If shoes are
Labor intensive and automobiles are capital intensive, what
Will happen under the HO model?
A)The labor­abundant country will export automobiles.
B)The capital­abundant country will export shoes.
C)The labor­abundant country will import shoes.
D)The capital­abundant country will import shoes.

Quizplus · Accepted Answer

According to the Heckscher-Ohlin (HO) model, a country will export goods that use its abundant resources intensively. Therefore, the capital-abundant country will export capital-intensive goods (automobiles) and import labor-intensive goods (shoes).

Consider Two Products, Automobiles and Shoes.If Shoes Are