If Two Countries Are Very Different in Relative Factor Abundance,then

question 16

Multiple Choice

If two countries are very different in relative factor abundance,then empirical support for which of the following would be less likely?

• A)the Gravity Theorem
• B)the Law of One Price
• C)the Law of Demand
• D)the Factor Price Equalization Theorem
• E)the Heckscher- Ohlin Theorem

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Definitions:

Production Function

A model in economics that describes the relationship between the quantities of productive factors used (inputs) and the amount of product obtained (outputs).

Inputs

Resources used in the production of goods and services, such as labor, materials, and capital.

Output

The total amount of goods or services produced by a company, system, or economic process.

Marginal Product

The additional output that is produced by using one more unit of a particular input, ceteris paribus.