Answered: 5. The Heckscher-Ohlin theory of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The Heckscher-Ohlin theory of international trade
claims that:
a. The global market determines the division of labor
b. The gains from trade are attributed to comparative advantage
c. The gains from trade are attributed to the concept of absolute advantage
d. A country’s resource endowments define the country’s exports

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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