The Leontief Paradox
A) proved that the U.S. economy is different from all others.
B) failed to support the validity of the Ricardian theory.
C) supported the validity of the Ricardian theory of comparative advantage.
D) supported the validity of the Heckscher-Ohlin model.
E) failed to support the validity of the Heckscher-Ohlin model.

Question

Quizplus · Accepted Answer

The Leontief Paradox refers to a study that found that the United States, which was assumed to have an abundance of capital and a scarcity of labor, actually had a higher capital to labor ratio for its exports than for its imports. This contradicted the predictions of the Heckscher-Ohlin model, which suggests that countries will export goods that use their abundant factors of production and import goods that use their scarce factors. Therefore, the Leontief Paradox failed to support the validity of the Heckscher-Ohlin model.