Answer to Question #48170 in Other Economics for sara
2) Verbally and graphically explain the production structures of trading partners in the HO model. Your answer should discuss output and input choices given goods and factor prices as well as factor endowments.
3) Verbally and graphically present the benefits of trade from the perspective of the HO model. List and briefly explain two main implications of trade.
2) The Heckscher–Ohlin model (H–O model) is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the factor endowments of a trading region. The model essentially says that countries will export products that use their abundant and cheap factor(s) of production and import products that use the countries' scarce factor(s).
3) The exports of a capital-abundant country will be from capital-intensive industries, and labour-abundant countries will import such goods, exporting labour-intensive goods in return. Competitive pressures within the H–O model produce this prediction fairly straightforwardly. Conveniently, this is an easily testable hypothesis.
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