Question

In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in:________

a. tastes and preferences.
b. military capabilities.
c. the size of their economies.
d. relative abundance of factors of production.
e. labor productivities.

Answer 1

d. relative abundance of factors of production

Step-by-step explanation:

The Heckscher-Ohlin model is also known as the 2x2x2 model or H-O model. This model is used to assess the trade or mainly the equilibrium of a trade that is between two countries having different natural resources and different specialties.

The 2-factor, 2 good Heckscher-Ohlin model is used for the two countries which differs in the relative abundance of factors of production.