The Trade Model of the Swedish Economists Heckscher and Ohlin

question 11

Multiple Choice

The trade model of the Swedish economists Heckscher and Ohlin maintains that

• A) absolute advantage determines the distribution of the gains from trade.
• B) comparative advantage determines the distribution of the gains from trade.
• C) the division of labor is limited by the size of the world market.
• D) a country exports goods for which its resource endowments are most suited.

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Definitions:

Dumping

The practice of selling goods in a foreign market at a price that is below the cost of production or below the price in the home market, often considered an unfair trade practice.

Government Subsidies

Financial assistance provided by the government to individuals, organizations or industries to support or promote economic and social policies.

Budget Surplus

A situation where income or receipts exceed expenditures, typically within a government's budget.

U.S. Exports

The outbound shipment of goods and services from the United States to other countries.