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Review_Midterm2 - Econ 370 Fall 2013 International Trade...

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Econ 370 Fall 2013 International Trade Professor Soderbery Midterm2 Practice Questions Short Answer Questions: Heckscher-­‐Ohlin Model: 1. In a two good, two factor, Heckscher-­‐Ohlin model, can a country export both goods if it is abundant in both factors of production? 2. In the Heckscher-­‐Ohlin model, after opening up to trade, suppose a country exports a capital intensive good. What happened to the capital intensity of production in the capital intensive good? What happened to the capital intensity of production in the labor intensive good? 3. In the Heckscher-­‐Ohlin model, do the returns to factors depend on which industry a factor is employed? 4. Why were the results of Leontief’s test of the Heckscher-­‐Ohlin model considered a paradox? Name at least three reasons why Leontief may have arrived at these “paradoxical” results. Heckscher-­‐Ohlin Questions: 1. For this question regarding the Heckscher-­‐Ohlin model assume the following: there are two countries, Home and Foreign, abundant in capital and labor respectively.
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