The trade model of the Swedish economies Heckscher and Ohlin maintains that ?
Correct answer: D. A country exports goods for which its resource endowments are most suited
- A. Absolute advantage determines the distribution of the gains from trade
- B. Comparative advantage determines the distribution of the gains from trade
- C. The division of labor is limited by the size of the world market
- D. A country exports goods for which its resource endowments are most suited
Explanation
Heckscher-Ohlin predicts that a country exports goods that use its relatively abundant factors of production intensively. Thus, resource endowments determine the pattern of comparative advantage.
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