The Heckscher-Ohlin Model assumes that:
A) consumer tastes are different in the two countries and invariant with respect to income.
B) consumer tastes are the same in the two countries and invariant with respect to income.
C) consumer tastes within each country have no effect on international trade.
D) consumer tastes are different in the two countries and have no effect on international trade.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin Model assumes that consumer tastes are the same in the two countries and invariant with respect to income. This means that the model focuses on differences in factor endowments (such as labor, capital, and natural resources) between countries as the primary driver of international trade, rather than differences in consumer preferences.

The Heckscher-Ohlin Model Assumes That