Assume that Home is relatively abundant in labor and
Relatively scarce in land.The HeckscherOhlin model
Predicts that trade with other countries will cause increased
Returns to:
A)Home's labor.
B)Home's land.
C)neither both Home's labor nor land.
D)both Home's labor and land.

Question

Assume that Home is relatively abundant in labor and
Relatively scarce in land.The Heckscher­Ohlin model
Predicts that trade with other countries will cause increased
Returns to:
A)Home's labor.
B)Home's land.
C)neither both Home's labor nor land.
D)both Home's labor and land.

Quizplus · Accepted Answer

According to the Heckscher-Ohlin model, trade leads to increased returns to the abundant factor of production, which in this case is labor. Therefore, home's labor will experience an increase in returns due to trade.

Assume That Home Is Relatively Abundant in Labor and