According to the Heckscher–Ohlin theorem, a country will specialize in and export goods that are:
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Get StartedAccording to the Heckscher–Ohlin theorem, a country will specialize in and export goods that are:
Options:
- Produced with the highest total factor productivity in that country
- Intensive in the factor the country has in relative abundance
- Those with the lowest absolute production costs across all countries
- Goods with the highest domestic demand elasticity
Correct answer: Intensive in the factor the country has in relative abundance
Explanation: Heckscher–Ohlin predicts trade patterns are driven by relative factor endowments: countries export goods intensive in their abundant factor. This insight traces to Heckscher (1919) and Ohlin (1933).
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