In the Heckscher-Ohlin model, countries are assumed to differ only in terms of their
A) factor endowments.
B) tastes and preferences.
C) available technologies.
D) factor productivities.
E) physical size.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model is based on the assumption that countries differ based on their factor endowments, specifically their relative abundance of factors of production such as labor, capital, and land. The model predicts that countries will tend to specialize in and export goods that make intensive use of their abundant factors, and import goods that make intensive use of their scarce factors. Therefore, the model is based on differences in factor endowments, making choice A the best answer.

In the Heckscher-Ohlin Model, Countries Are Assumed to Differ Only