Source of comparative advantage in the heckscher-ohlin model

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Reference no: EM133301447

Assignment:

(a) What is the source of comparative advantage in the Heckscher-Ohlin model? Explain.

(b) In the Heckscher-Ohlin model, what assumption is made about opportunity costs? Explain.

(c) The graph below shows the PPC for a country that can produce oil or televisions. The straight line is the trade line and CPC if production is at Point A. Is this country producing the optimal mix of oil and televisions to maximize its income? Carefully explain how you know.

Reference no: EM133301447

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