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In the Situation of "Demand Reversal" in a 2x2x2 Context

Question 24

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In the situation of "demand reversal" in a 2x2x2 context where all the assumptions of the Heckscher-Ohlin analysis hold except for the assumption of identical demands across Countries, and when the countries are trading with each other,


A) one country will be conforming to the trade pattern predicted by the Heckscher-Ohlin Theorem but the other country will not be conforming to that pattern.
B) both countries will be conforming to the trade pattern predicted by the Heckscher-Ohlin theorem if the "price" (or "economic") definition of relative factor Abundance is used but not if the "physical" definition of relative factor abundance Is used.
C) both countries will be conforming to the trade pattern predicted by the Heckscher-Ohlin theorem if the "physical" definition of relative factor abundance is used but Not if the "price" (or "economic") definition of relative factor abundance is used.
D) factor price equalization across the two countries cannot occur.

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