Which statement about the Heckscher-Ohlin model is correct?
A) It does not offer an explanation of the gains from trade.
B) It does not offer an explanation of the patterns of trade.
C) It offers an explanation of the effects of trade on the returns to capital and labor.
D) It offers an explanation of the effects of trade on factor abundance.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model explains how trade affects the returns to capital and labor by focusing on the differences in factor endowments between countries.

Which Statement About the Heckscher-Ohlin Model Is Correct