Which of the following is a part of the Heckscher-Ohlin model that states international trade will bring about equalization in the returns to homogeneous factors across nations?

Question

Quizplus · Accepted Answer

The factor-price equalization theorem is a key part of the Heckscher-Ohlin model, as it states that international trade will lead to the equalization of factor prices (i.e. wages, rent, etc.) between countries that have similar factor endowments and trade in similar goods. This is based on the assumption that factors of production (e.g. labor, capital) are mobile within a country but immobile between countries. The factor-proportions theory and factor-endowment theory are also key parts of the Heckscher-Ohlin model, but the specific concept of factor-price equalization is only captured by choice A. The product cycle theory, on the other hand, is a separate theory altogether that focuses on the evolution of new products in the global marketplace.

Which of the Following Is a Part of the Heckscher-Ohlin