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It explains how international trade is realized under the short run factor immobility within the Heckscher-Ohlin Theory context.

According to it, the factor mobility that is assumed by the Heckscher-Ohlin Theory can only be attained in the long run.

It postulates that some of the factors of production can be immobile or can only be used in the production of a commodity.

According to it, the mobility of the factors of production within a country cannot be attained if one of the factors is a specific factor.

It explains the situation in which a commodity is the labor-intensive commodity in the labor-abundant country and the capital-intensive commodity in the capital- abundant country.

new-product stage

product-growth stage

product-maturity stage

product-standardization

product-decline stage

Production possibilities frontier

Indifference curve

Opportunity cost

Tradeoff

Productivity

Protect domestic producers

Collect revenue to the Treasury

Adjust balance of payments

Seem possible to extend

Serve for diplomatic relations

Positive economies of scale.

Non-tariff restrictions.

Pattern of trade.

Foreign exchange market.

Negative economies of scale.

Technology is the same in both countries.

Demand preferences are different in both countries.

There is free trade between the trading countries.

International trade between the trading countries is balanced.

Two countries, two commodities and two factors of production.

Hereditary skill

Growth of subsidiaries

Use of specialized machinery

Local market for skill

Introduction to new ideas

Factor price index

Income elasticity of demand

Increasing returns to scale

Factor-intensity reversal

Unemployment rate

Only I

Only II

Only III

I-II

II-III

Robert Torrens

David Ricardo

Adam Smith

David Hume

Gottfried Haberler

I and III

II and IV

I, II, III

I, II, IV

II, III, IV

9

10

11

12

13

Textile

Vanilla

Automobiles

Foot wear

Furniture

Technology is the same in both countries.

One of the countries is labor-abundant and the other one is capital-abundant.

Demand preferences are different in both countries.

There is incomplete specialization in the production in both countries.

There is perfect competition in the commodities and the factor markets in both countries.

Devaluation

Revaluation

Foreign exchange rate

Currency depreciation

Currency appreciation

It gives the total amount of imports and exports.

It  gives the difference between total imports and total exports.

There is a trade deficit.

It means that there is a trade surplus.

None of them defines it correctly.

There is perfect competition in the commodities and the factor markets in both countries.

There are two countries, two commodities, and one factor of production all over the world.

There is complete specialization in the production in both countries.

There is increasing returns to scale in the production of all commodities.

There is free movement of factors of production within each country and free movement of factors of production between countries.

Lowering the value of the national currency

Raising the value of the national currency

Increasing the value of the national currency compared to a foreign currency

Decreasing the value of the national currency compared to a foreign currency

The price at which a currency is exchanged for the other currency

They exist when the cost of producing a unit of commodity increases as its output rate increases.

They exist when transportation costs comprise of freight charges, warehousing costs, costs of loading and unloading, etc.

They exist when the cost of producing a unit of commodity decreases as its output rate increases.

They exist when demand for raw materials has been declining on all over the world.

They exist when trade restrictions are part of the trade policy of all countries. 

Natural advantage 

Labor productivity

Comparative advantage

Autarky

Opportunity costs