Which of the following is NOT a proposition of the Heckscher-Ohlin model?
A)A country has a comparative advantage in the production of that commodity which uses more intensively the country's more abundant resource.
B)The effect of international trade is to tend to equalize factor prices between the trading nations.
C)If the United States is a skilled labor abundant country, then the United States has a comparative advantage in the production of goods that use skilled labor more intensively.
D)Countries will completely specialize in the product in which they have a comparative advantage if free trade is allowed to occur.

Question

Quizplus · Accepted Answer

While the Heckscher-Ohlin model does suggest that countries will specialize in the production of the goods in which they have a comparative advantage, it does not suggest complete specialization. Instead, countries will still produce some other goods as well in order to meet their domestic needs and preferences.

Which of the Following Is NOT a Proposition of the Heckscher-Ohlin