An implication of the Heckscher-Ohlin theorem is that
A) if two countries have identical tastes, then no trade will occur between them.
B) the relative price of a country's scarce factor of production will rise when the Country is opened to trade.
C) income distribution in a country does not change when a country is opened to trade.
D) two countries with identical tastes can still have a basis for trade if factor endowments Of the countries differ and if factor intensities of the commodities differ.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theorem suggests that countries will export goods that use their abundant factors intensively and import goods that use their scarce factors intensively. Therefore, even if two countries have identical tastes, they can still trade based on differences in factor endowments and factor intensities.

An Implication of the Heckscher-Ohlin Theorem Is That