What is the Heckscher-Ohlin theorem? Using the case studies in the chapter on U.S. trade with China describe the theory and the resulting trade patterns that would support it
What will be an ideal response?
Students should address the following:
• A clear statement of the HO Theorem along the lines that nations differ in their endowments of factors of production, products differ in how intensively they use various factors of production, so a nation that has a relative abundance in a specific factor of production compared to its trading partner will have a comparative advantage in products that use that factor of production more intensively.
• The U.S. would have an abundance of capital and skilled labor and China unskilled labor. The text offers data that supports this.
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The demand curve for a luxury good is upward sloping
Indicate whether the statement is true or false
The postwar years:
a. ushered in what has been described as an unthinking materialist culture. b. ushered in what has been described as a consumer-oriented society that represented the fulfillment of the American dream. c. featured an unusual deviation from the long-term trend toward smaller families. d. All of the above are correct. e. Only a and b are correct.