In the Heckscher-Ohlin Model, When Two Countries Begin to Trade

question 34

Multiple Choice

In the Heckscher-Ohlin model, when two countries begin to trade with each other

• A) the relative prices of traded goods in the two countries converge.
• B) relative factor prices in the two countries diverge.
• C) benefits from trade are evenly distributed between the two countries.
• D) all factors in both countries will gain from trade.
• E) all factors in one country will gain, but there may be no gains in the other country.

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