The model suggesting that countries will specialize in producing the good that uses its relatively abundant factor of production MOST intensively is referred to as the _____ model.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model is based on the assumption that countries possess different factor endowments (i.e. some countries have more capital, while others have more labor), and that countries will specialize in producing goods that use their abundant factors of production most intensively, while importing goods that use their scarce factors of production. The other choices are not related to this concept.

The Model Suggesting That Countries Will Specialize in Producing the Good