Question

The implication of resources being mobile domestically is that:

A) there is often unemployment.

B) capital and land are often not suited for use in other industries.

C) labor is paid the same wage and capital receives the same rental price in all domestic industries.

D) they lose the chance to become guest workers in other nations.

Answer 1

Ans: labor is paid the same wage and capital receives the same rental price in all domestic industries.

Explanation:

The Heckscher-Ohlin model assumes that there are only 2 nations, with 2 goods and 2 factors of production. It is also assumed that factors of production, i.e., labor and capital can move freely domestically, but cannot move internationally. Labor is paid the same wage and capital receives the same rental price in all domestic industries.

Thus, option [C] is correct answer.