Which of the following are the assumptions of Heckscher-Ohlin theory? a) Complete specialisation in…
The standard Heckscher-Ohlin model assumes the same technology across nations, perfect competition and no transportation costs. Complete specialization is not an assumption…
Choose your answer
Which of the following are the assumptions of Heckscher-Ohlin theory?
a) Complete specialisation in production.
b) Same technology across nations.
c) Perfect competition.
d) No transportation cost.
Answer and explanation
Correct answer C
The standard Heckscher-Ohlin model assumes the same technology across nations, perfect competition and no transportation costs. Complete specialization is not an assumption of the model; both countries can continue to produce both goods.
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Karnataka SET (KSET)