Which of the Following Is an Assertion of the Heckscher-Ohlin

question 30

Multiple Choice

Which of the following is an assertion of the Heckscher-Ohlin model?

• A) In the long run, labor is mobile and capital is not.
• B) Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.
• C) An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.
• D) Factor price equalization will occur only if there is costless mobility of all factors across borders.
• E) An increase in a country's labor supply will increase production of the labor-intensive good and decrease production of the capital-intensive good.

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Definitions:

Price of Capital

This entails the expenses linked to acquiring and utilizing capital goods, such as machinery, indicating the return investors demand for use of their capital.

Cost-Minimizing

A strategy or process of finding the most efficient way to produce goods or services at the lowest possible cost.

Inputs

The resources (such as labor, capital, materials, and energy) used in the production process to produce goods and services.

Marginal Product

The increase in output that results from employing one more unit of a factor of production, holding all other factors constant.