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Heckscher-Ohlin model - Two countries Home and Foreign produce goods A and B. Labor and capital are the only factors of production and each industry produces both goods. If Home is capital-abundant and production of B requires relatively more labor:

With trade

a) in H, the relative amount of labor employed in production of A will increase and the relative wages rise
b) In H, the relative amount of labor employed in production of B will decrease and the relative wages rise
c) in H, the relative amount of labor employed in production of A will decrease and the relative wages will fall
d) in H, the relative amount of labor employed in production of A will increase and the relative wages will fall
e) In H, the relative amount of labor employed in Production of B will decrease and the relative wages fall

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M942479

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