Assume that only two countries, A and B, exist.

-Refer to the table above. If good S is capital intensive, then following the Heckscher-Ohlin Theory
A) country B will export good S.
B) country A will export good S.
C) both countries will export good S.
D) trade will not occur between these two countries.
E) both countries will import good S.

Question

Assume that only two countries, A and B, exist.
 
-Refer to the table above. If good S is capital intensive, then following the Heckscher-Ohlin Theory
A) country B will export good S. 
B) country A will export good S. 
C) both countries will export good S. 
D) trade will not occur between these two countries. 
E) both countries will import good S.

Quizplus · Accepted Answer

According to the Heckscher-Ohlin Theory, a country will export goods that use its abundant factors intensively. If good S is capital intensive, then the country with a relative abundance of capital (country B) will export good S.

Assume That Only Two Countries, a and B, Exist