Assume now that tastes are different in home also foreign., Ask an Expert

Economics

Graphing the export and import shift due to changes in tastes.

The Heckscher-Ohlin model assumes that tastes are the same in Home and Foreign. Assume now that tastes are different in Home also Foreign. Is it possible for the capital intensive nation to now import the capital intensive good? Discuss briefly the intuition, and then illustrate your answer using the PPF-indifference curve diagrams for Home and Foreign.

We continue to assume that Home is capital abundant and Foreign is labor abundant. They produce computers and shoes. Computers are capital intensive and shoes are labor intensive.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M919642

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