Question 1 (a) Interpret the prediction of Hecksher-Ohlin theorem on international trade in the exports and imports....

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Economics

Question 1
(a) Interpret the prediction of Hecksher-Ohlin theorem oninternational trade in the exports and imports.
(b) Determine three (3) critical assumptions of a simplistic andspecific version of Hecksher-Ohlin theory for gains in trade, whichcan be challenged as not true in the real world?
(c) Demonstrate why the highly restrictive assumption ofHecksher-Ohlin theorem that determines the pattern of internationaltrade, which is also referred to as the factor proportion theory,is also deemed as unrealistic?

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aHeckscherOhlin helps us to predict a countrys pattern of trade based on its endowment of factors of production A country pattern of trade is its composition of what is it exporting and what is importing What kind of factors of production does the country have labor capital and in what proportion is Endowment of factors of production in particular the HO theorem helps us predict what kinds of goods and services does a country is going to export and import for example there are two countries country M and country N these two countries See Answer

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