ZuoTi.Pro
Question

What are the essential assumptions behind the Heckscher-Ohlin (H-O) Theory?

What are the essential assumptions behind the Heckscher-Ohlin (H-O) Theory?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

The following are certain assumptions regarding the 2*2 Heckscher Ohlin model:-

It is assumed that there are two nations with two goods to trade (say good X and good Y) and two factors of production (capital and labour). The two nations use the same technology and same uniform factors of production to produce the goods. The tastes and preferences in both the countries are the same. Both have good X as labour intensive and good Y as capital intensive. Constant returns to scale is applicable to the production of both the goods in both the nations. There is perfect competition in the goods and factors market. Specialization in production is not complete. There also exists perfect mobility of factors of production within each country.

0 0
Add a comment
Know the answer?
Add Answer to:
What are the essential assumptions behind the Heckscher-Ohlin (H-O) Theory?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 3. Heckscher-Ohlin theory. Assume there are two nations (1 and 2), two goods (X and Y),...

    3. Heckscher-Ohlin theory. Assume there are two nations (1 and 2), two goods (X and Y), two factors of production (L and K). Commodity X is labor intensive, commodity Y is capital intensive. All assumptions are made following the standard H-O theory 3.1 Suppose nation 1 is L-abundant, and nation 2 is K-abundant. Please graph the production possibility frontiers of both nations. 3.2. What is the no-trade equilibrium in both nations? Please show on the graph and explain. 3.3. What...

  • In the traditional Heckscher-Ohlin model, the two countries differ in: Select one: O a. Technology O...

    In the traditional Heckscher-Ohlin model, the two countries differ in: Select one: O a. Technology O b. Their preferences for cloth and food. O c. Capital productivity. d. Relative abundance of production factors. Assume that two countries, Home and Foreign, are endowed with the following production factors. Countries Factor Endowments Home Foreign Labor (L) 9040 Capital (K) 30 20 Assume that food is capital-intensive and cloth is labor-intensive. Following the Heckscher-Ohlin Theory Select one: A. Foreign will export food. B....

  • ishes, (b) increases, (e) remains unehanged, l Problems THE HECKSCHER-OHLIN THEORY 3.1 (a) Identify the conditions...

    ishes, (b) increases, (e) remains unehanged, l Problems THE HECKSCHER-OHLIN THEORY 3.1 (a) Identify the conditions that may give rise to trade between two nations. (b) What are some of the assumptions on which the Heckscher-Ohlin theory of trade is based? (c) What does this theory say about the pattern of trade and effect of trade on factor prices? uppose that (1) the capital-labor ratio (Le , KL) to produce l unit of wheat is greater than theKL produce I...

  • 1) We are in two good, two country, where all of the assumptions of the Heckscher-Ohlin...

    1) We are in two good, two country, where all of the assumptions of the Heckscher-Ohlin model of trade are satisfied. Suppose that in Japan there are 50 workers and 50 acres of land, while in the US there are 100 workers and 200 acres of land. Suppose furthermore that the two goods, rice, and cloth, are produced using land and labor. Rice is land intensive. Suppose the two countries open up to trade. What will be the pattern of...

  • will have a production possibility In the Heckscher-Ohlin model, the country with the relative abundance of...

    will have a production possibility In the Heckscher-Ohlin model, the country with the relative abundance of frontier that is biased toward the production of the good. Select one: O A. land; labor intensive O B. land; capital intensive C. labor; capital intensive O D. labor; labor intensive In the Heckscher-Ohlin, gains from international trade come from Select one: A. the increased wages. O B. the improvement in technology. C. the increasing on the consumption choices available to consumers. D. the...

  • We are in two good, two countries, where all of the assumptions of the Heckscher-Ohlin model...

    We are in two good, two countries, where all of the assumptions of the Heckscher-Ohlin model of trade are satisfied. Suppose that in Japan there are 50 workers and 50 acres of land, while in the US there are 100 workers and 200 acres of land. Suppose furthermore that the two goods, rice, and cloth, are produced using land and labor. Rice is land intensive. Suppose workers in the US go on strike to protest free trade. why would they...

  • 2. Answer the following question under the assumptions of the Heckscher-Ohlin model. There are two industries of pr...

    2. Answer the following question under the assumptions of the Heckscher-Ohlin model. There are two industries of production: clothing (Qd) and food (Qr). Clothing is capital-intensive and food is labor-intensive. There are two countries: Home and Foreign. Home is capital abundant and Foreign is labor abundant. (Same as in class) a. Draw a "box" graph that represents the labor and capital inputs into each industry in Home b. What do the slopes of the lines drawn in part (a) represent?...

  • Assume that we are in a Heckscher Ohlin world: 2 Two countries: Home (H) and Foreign...

    Assume that we are in a Heckscher Ohlin world: 2 Two countries: Home (H) and Foreign (F), 2 Factors: Capital (K) and Labor (L), 2 Goods: Cloth (C) and Food (F). Home: The Labor (L) and Capital (K) used to produce Cloth and Food are: aKC=2, aLC=2, aKF=3, aLF=1. Home Endowments are: K=1,500 units of machine hours, L=1,000 units of work hours. Based on the description of the problem, what amount of food does the home country produce? What amount...

  • 1. The Heckscher–Ohlin model Home and Foreign have two production fac- tors, skilled and unskilled labor...

    1. The Heckscher–Ohlin model Home and Foreign have two production fac- tors, skilled and unskilled labor and produce two goods, textiles and com- puters. Home is skilled labor abundant, and computers are skilled labor intensive. Starting from a situation of autarky, the two countries liberalize trade. Assuming that the two countries produce both goods before and after trade liberalization, answer the following questions: (a) What is the effect of trade liberalization on the relative price of com- puters at Home...

  • Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country His relatively labor abundant, then...

    Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country His relatively labor abundant, then once trade begins: c. wage/rent ratio rises in H wage/rent ratio falls in H wage/rent ratio remains constant in H. None of the above.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT