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Once the Heckscher-Ohlin (HO) Model's Assumptions of Perfect Competition and Increasing

Question 1

Multiple Choice

Once the Heckscher-Ohlin (HO) model's assumptions of perfect competition and increasing costs are dropped, different logical conclusions about international trade are possible, such as:


A) increasing returns to scale explain why most trade occurs between similar high-income economies rather than the most different economies.
B) international trade is mostly conducted by monopolistic producers that charge prices that exceed their production costs.
C) the gains and losses from opening an economy to foreign trade also differs from the patterns predicted by the neoclassical HO model and its factor price equalization theorem and Stolper-Samuelson theorem.
D) All of the above.
E) None of the above.

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