The Heckscher-Ohlin theory rules out the basis for trade of the David Ricardo model by assuming that ______ is (are) the same for all countries.
A) expenditures on advertising and sales promotion
B) transportation costs
C) technology
D) levels of personal income

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory assumes that technology is the same for all countries, whereas the basis for trade in the David Ricardo model is differences in technology. Therefore, the Heckscher-Ohlin theory rules out the Ricardo model as a basis for trade. The other choices (expenditures on advertising and sales promotion, transportation costs, levels of personal income) are not relevant to the Heckscher-Ohlin theory or the Ricardo model of trade.

The Heckscher-Ohlin Theory Rules Out the Basis for Trade of the David