Which of the following is an assertion of the Heckscher-Ohlin model?
A) The wage-rental ratio is determined by relative product prices.
B) An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.
C) In the long-run, labor is mobile and capital is not.
D) Factor price equalization will occur only if there is costless mobility of all factors across borders.
E) Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model asserts that the wage-rental ratio is determined by relative product prices, as it focuses on how countries export goods that use their abundant factors intensively.

Which of the Following Is an Assertion of the Heckscher-Ohlin