Exam 5: Resources and Trade: The Heckscher-Ohlin Model

In the 2-factor,2 good Heckscher-Ohlin model,trade will ________ the owners of a country's ________ factor and will ________ the good that uses that factor intensively.

In the Heckscher-Ohlin model,when two countries begin to trade with each other

In the 2-factor,2 good Heckscher-Ohlin model,the country with a relative abundance of ________ will have a production possibility frontier that is biased toward production of the ________ good.

In the 2-factor,2 good Heckscher-Ohlin model,the two countries differ in

If Gambinia has many workers but very little land and even less productive capital,then,following the Heckscher-Ohlin model,in order to improve the country's economic welfare,the Gambinian government should

The Heckscher-Ohlin model differs from the Ricardian model of Comparative Advantage in that the former

-Refer to above figure.Would you expect to find that the real wages become equalized in both countries? Explain the reason for any differences you note.

Why are prices of factors of production NOT equalized?

Factors tend to be specific to certain uses and products

Which of the following empirical studies provided the most support for the heckscher-Ohlin model?

-Refer to above figure.Two countries exist in this model,P and R.P is relatively labor (L)abundant,as is evident in the bottom right horizontal axis.If Country P were to be completely specialized in the labor-intensive product,C,it would be producing at point 4.In fact,it produces both C and P,at point 5.The (autarky)relative price of C (in terms of F) of Country P is at point 3; and of Country R at point 1. If trade were to open up between these two countries, which would export C and which would export F? Is this consistent with the Heckscher-Ohlin model? Explain.

In the 2-factor,2 good Heckscher-Ohlin model,trade will ________ the owners of a country's ________ factor and will ________ the good that uses that factor intensively.

One way in which the Heckscher-Ohlin model differs from the Ricardo model of comparative advantage is by assuming that ________ is (are)identical in all countries.

In the 2-factor,2 good Heckscher-Ohlin model,the country with a relative abundance of ________ will have a production possibility frontier that is biased toward production of the ________ good.

Empirical observations on actual North-South trade patterns tend to

If Australia has more land per worker,and Belgium has more capital per worker,then if trade began between these two countries

Why is the H.O.model called the factor-proportions theory?

Starting from an autarky (no-trade)situation with Heckscher-Ohlin model,if Country H is relatively labor abundant,then once trade begins

The 1987 study by Bowen,Leamer and Sveikauskas

The Heckscher-Ohlin model predicts all of the following EXCEPT