Foreıgn Trade Deneme Sınavı Sorusu #1396907
Which of the simplifying assumptions of the Heckscher-Ohlin Theory is the assumption that both countries are continuing to produce both commodities?
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Demand preferences are the same in both countries. |
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There is perfect competition in the commodities and the factor markets in both countries. |
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There is full employment in all resources in both of the trading countries. |
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There is incomplete specialization in the production in both countries. |
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There is free trade between the trading countries. |
The assumption that ‘There is incomplete specialization in the production in both countries.’ postulates that both countries are continuing to produce both commodities. Countries trade with each other with respect to the comparative advantage under free trade. Each country specializes in the production of the commodity in which it has comparative advantage but does not end up to produce the other commodity in which it has a comparative disadvantage.
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