International trade causes the price paid to the abundant factor of production to rise and the price paid to the scarce factor of production to fall.

Question

Quizplus · Accepted Answer

According to the Heckscher-Ohlin model of international trade, a country will export goods that make intensive use of its abundant factor of production, leading to an increase in its price, and import goods that make intensive use of its scarce factor, leading to a decrease in its price.

International Trade Causes the Price Paid to the Abundant Factor