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August 31, 2014

Homework Help: international trade

Posted by swan on Thursday, March 20, 2008 at 7:33pm.

the heckscher- ohlin model

question is below..
can anyone explain this question..?

The Heckscher-Ohlin model assumes that tastes are the same in Home and Foreign.
Suppose now that tastes are different in Home and Foreign. Is it possible for the capital intensive country to now import the capital intensive good?
Briefly discuss the intuition, and then illustrate your answer using the PPF-indifference curve diagrams for Home and Foreign.

We continue to assume that Home is capital abundant and Foreign is labor abundant. They produce computers and shoes.
Computers are capital intensive and shoes are labor intensive.

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