Question

Which of the following statements is true?

Answer 1

Answer:

A) The Heckscher-Ohlin model offers a reasonable explanation of the pattern of trade and the gains from trade.

Explanation:

A) The Heckscher-Ohlin model mentions that some countries have capital products and some have labor work products. In that condition some countries might be producing capital products like cars and mobile phones however these countries might have less labor work products like agricultural products so that they can not produce enough food. In that sense there is a trade that occurs between two countries one having a capital like a car and others having a high food production so the trade gets balance thanks to this import and export of products. Basically, each country exports its products that they are leading whether it has capital good or labor work good and imports goods that they are lack of it whether it is capital or labor work products. Well, gains from trade happens thanks to this exchange.

B) No, the Heckscher-Ohlin model offers a pattern of trade between two countries according to capital goods and labor work products.

C) No, the Heckscher-Ohlin model explains the gain. Possible to gain from your goods. If a country produces capital good then gains from that or produce labor work good then gains from it by export to other countries that they have lack of that good.

D) The Ricardian trade model focuses only on labor work goods but Heckscher-Ohlin states that trade based on labor work goods and capital goods.