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Homework answers / question archive / The Heckscher-Ohlin model predicts all of the following EXCEPT A) that relative wages will tend to become equal in both trading countries
The Heckscher-Ohlin model predicts all of the following EXCEPT A) that relative wages will tend to become equal in both trading countries. B) which factor of production within each country will gain from trade. C) which country will export which product. D) that trade increases a country's overall welfare. E) the volume of trade.
The correct option is e.
a) Heckscher Ohlin model predicts that trade between two countries will have impact on wages to be paid to the labour of those countries.
b) It predicts which factor of production in a particular country will lead to its gain from trade. Like capital abundant country will gain from capital.
c) This model also predicts about which country will export which product from which it can gain. Like capital abundant country will export capital based goods.
d) Heckscher Ohlin model predicts that trade will increase the welfare of the nation and will benefit it.
e) Heckscher ohlin model makes no predictions about the volume of trade. It only tells about which country will export which good and from which factor it will gain. But the volume of trade is not being predicted in this model.
