There are many reallife examples of factorintensity
Differences across the same industries in different nations.
How does the HeckscherOhlin model handle this?
A) The HO model makes no assumptions about different factor intensities.
B) The HO model assumes that all firms require equal amounts of capital and labor just to be on the safe side.
C) The HO model ignores the possibility of different factor intensities and instead assumes that each industry has the
Same factor intensity in every nation.This assumption
Enables the model to predict trade based on other factors.
D) Actually, the factorintensity reversal issue does not change the predictive value of the model.
Correct Answer:
Verified
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