Heckscher Ohlin model Flashcards

1
Q

Assumptions of Heckscher Ohlin (part 1)

A
  • Two countries: Home and Foreign (marked with *)
  • Two factors of production: Labour (L) and Capital ( K )
  • Each country has a fixed supply of each factor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Assumptions of Heckscher Ohlin (part 2)

A
  • Two goods: Computers (C) and Shoes (S)
  • Shoes are labour intensively produced
  • computers are capital intensively produced
  • Wages and rental are equal between sectors
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Assumptions of Heckscher Ohlin (part 3)

A
  • Constant return to scale for labour and capital - mobile
  • Home and Foreign share the same production technologies
  • Home & Foreign consumers have the same preferences for shoes and
    computers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Labour/capital Ratios

A
  • Lower labour-to-capital ratio means more machines per worker
  • thus the marginal product of capital and the real rental must be
    lower.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Heckschar Ohlin (Fig 1)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Heckschar Ohlin (Fig 2)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Heckschar Ohlin (Fig 3)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Heckschar Ohlin (Fig 4)

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly