What is the Heckscher-Ohlin theorem? Using the case studies in the chapter on U.S. trade with China describe the theory and the resulting trade patterns that would support it
What will be an ideal response?
I would expect my students to address the following:
? A clear statement of the HO Theorem along the lines that nations differ in their endowments of factors of production, products differ in how intensively they use various factors of production, so a nation that has a relative abundance in a specific factor of production compared to its trading partner will have a comparative advantage in products that use that factor of production more intensively.
? The U.S. would have an abundance of capital and skilled labor and China unskilled labor. The text offers data that supports this.
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Refer to Figure 3-4. At a price of $20, how many units will be sold?
A) 400 B) 500 C) 600 D) 800
The demand curve for the product of a perfectly competitive firm's demand curve indicates that if the firm
A) lowers its price, it can sell more. B) accepts the market-set price, the number of units the firm can sell is limited. C) raises its price, sales will fall to zero. D) changes its price, the quantity demanded will change in the opposite direction.
If increases in total spending are not offset by increases in the supply of goods and services, the average price level will rise. Which of the following factors is responsible for this rise?
a. Cost-push inflation b. Fiscal deficit c. Demand-pull inflation d. Wage-push inflation e. Unemployment
__________________ is the crucial characteristic of monopolistic competition.
A. Product differentiation B. Price discrimination C. Economies of scale D. Identical products