If Gambinia has many workers but very little land and even less productive capital, then, following the Heckscher-Ohlin model, in order to improve the country's economic welfare, the Gambinian government should
A) discontinue all international trade.
B) protect the labor-intensive product.
C) engage in free trade.
D) protect the capital-intensive product.
E) protect the land-intensive product.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model suggests that countries will benefit from trade by exporting goods that utilize their abundant factors of production and importing goods that utilize their scarce factors. Since Gambinia has many workers (labor is abundant) but very little land and even less productive capital, it should engage in free trade to export labor-intensive products and import capital and land-intensive products, thereby improving its economic welfare.

If Gambinia Has Many Workers but Very Little Land and Even