Which of the following best explains why opportunity costs are rising in the Heckscher-Ohlin model? The...

Which of the following best explains why opportunity costs are rising in the Heckscher-Ohlin model?

		The factor endowments vary across countries.
		All the factor inputs are not fully utilized in the production of different commodities.
		Different consumers have different tastes and preference sets.
		Different commodities use inputs in different proportions.

Solutions

Expert Solution

Ans is (d) Different commodities use inputs in different proportions.

Heckscher-Ohlin model says that countries export what they can most efficiently and plentifully produce and since different commodities use inputs in different proportion, so it will produce the one where less resources are required and import the other commodity as it will need more resources if it produced that commidity and hence importing it would be a better option

Rahul Sunny answered 2 years ago

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