A long-run model of trade basic to the determination of how mobile factors of production affect national welfare and the returns to the factors is known as:
A) the specific-factors model.
B) the Riparian model.
C) the Chicago model of trade.
D) the Heckscher-Ohlin model.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model is a long-run model of trade that analyzes the impact of factor endowments on trade patterns and the distribution of income. It is based on the assumption that countries differ in their factor endowments, such as labor or capital, and that these differences explain the pattern of trade between them, as well as the returns to factors. The model is also known as the factor proportions theory. The other options, such as the specific-factors model, are also models of trade, but they focus on short-run dynamics and assume that factors are immobile between sectors. The Riparian model and the Chicago model of trade are not widely recognized theoretical models of trade.

A Long-Run Model of Trade Basic to the Determination of How