Economics • Economic BasicsMedium
What does the 'Heckscher-Ohlin Model' of international trade primarily emphasize as the determinant of trade patterns?
A. Differences in technological advancement between nations.
B. Differences in national factor endowments such as labor and capital abundance.✓ Correct Answer
C. Absolute cost advantages driven by natural resource availability.
D. Government export subsidies and tariff barriers.
💡 Solution & Explanation
The Heckscher-Ohlin trade model asserts that countries export goods that intensively utilize their relatively abundant factor endowments, such as labor or capital, while importing goods requiring scarce factors. Technology differences are emphasized instead by the Ricardian trade model.
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