The Heckscher-Ohlin model predicts that the factor of production used more intensively in the production of exports will experience:
A) decreased demand and a decline in its relative price.
B) decreased demand and an increase in its relative price.
C) increased demand and an increase in its relative price.
D) no change in its demand because the factors of production are fixed in the short run.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin model predicts that a country will export goods that use its abundant factors of production more intensively. As a result, the demand for these factors increases, leading to an increase in their relative price.

The Heckscher-Ohlin Model Predicts That the Factor of Production Used