One of the Commonly Used Assumptions in Deriving the Heckscher-Ohlin

question 18

Essay

One of the commonly used assumptions in deriving the Heckscher-Ohlin model is that tastes are homothetic, or that if the per capita incomes were the same in two countries, the proportions of their expenditures allocated to each product would be the same as it is in the other country. Imagine that this assumption is false, and that in fact, the tastes in each country are strongly biased in favor of the product in which it has a comparative advantage. How would this affect the relationship between relative factor abundance between the two countries, and the nature (factor-intensity) of the product each exports?
What if the taste bias favored the imported good?

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Definitions:

Cost/o

A prefix in medical terms related to ribs.

Crani/o

A prefix relating to the skull.

Arthrocentesis

A medical procedure involving the puncture of a joint space with a needle to remove synovial fluid for diagnostic or therapeutic purposes.

Patella

Also known as the kneecap, it is a small flat triangular bone located at the front of the knee joint.