2. The Heckscher-Ohlin model differs from the Ricardian model of Comparative Advantage in that theformerA. has only two countries.B. has only two products.C. has two factors of production.D. has two production possibility frontiers (one for each country).E. None of the above.

The Heckscher-Ohlin model assumes that there are two countries, each of which produces two goods(say manufactures and agriculture) using labor and capital. Which of the following is an additionalassumption of the Heckscher-Ohlin model?A. The ratio of the quantity of labor to the quantity of capital is different for each nation, resulting indifferent “endowments” of capital and labor.B. One nation has larger quantities of both capital and labor than the other country.C. Capital is a specific resource in producing manufactured goods, and labor is a specific resource inproducing agricultural goods in each country.D. Labor and capital can move between countries

1. The following are all assumptions that must be accepted in order to apply the Heckscher-Ohlin Theory, except for one:A. countries differ in their endowments of factors of production.B. countries differ in their technologies.C. there are two factors of production.D. one product always requires more machines per worker in its production than does the other product.

The Heckscher-Ohlin Theory is based on assumptions:a.Perfect competition exists in both the product and factor markets.b.The factors of production are fully employed in both nations.c.The factors' intensities are not reversible.d.All of these

4. Which of the following is false (for the Heckscher-Ohlin model)?A. Differences in technologies could be the source of gains from trade.B. Some groups may gain and some may lose due to trade.C. Countries differ in the relative endowment of factor of productions.D. None of the above.

The assumption of diminishing returns in the Heckscher-Ohlin model means that, unlike in theRicardian model, it is likely thatA) countries will not be fully specialized in one product.B) countries will benefit from free international trade.C) countries will consume outside their production possibility frontier.D) comparative advantage will not determine the direction of trade.E) global production will decrease under trade.