After accounting for differing _________ as well as
_________, evidence for many countries is broadly
Consistent with the HeckscherOhlin model.
A)factor productivities; factor endowments
B)preferences; factor productivities
C)preferences; factor endowments
D)factor endowments; generalities

Question

After accounting for differing _________ as well as
_________, evidence for many countries is broadly
Consistent with the Heckscher­Ohlin model.
A)factor productivities; factor endowments
B)preferences; factor productivities
C)preferences; factor endowments
D)factor endowments; generalities

Quizplus · Accepted Answer

The Heckscher­Ohlin model explains that countries will specialize in producing goods that use their abundant factors of production, and will trade with countries that have a comparative advantage in producing goods that use their scarce factors of production. Therefore, the model is based on factor endowments, and evidence for many countries is consistent with this. However, it is important to also account for differing factor productivities (how efficiently factors of production are used) in different countries, which is why option A is the best choice. Option B implies that preferences (tastes for different goods) may explain the results, but this is not in line with the Heckscher­Ohlin model. Option D is too vague and does not provide enough information.

After Accounting for Differing _________ as Well as