Consider the typical HO setting: 2 countries, Colombia and Venezuela, produce two goods, manufactures and bread, with two factors, capital and labor. Both countries share the same tastes and the same technology. Manufactures' production is capital intensive. In Colombia there are 200 units of labor and 200 of capital, in Venezuela there are 40 units of labor and 100 of capital

1. Which of the following is NOT an assumption of the Heckscher Ohlin model?

a). Same tastes.

b). Factor mobility across industries

c). Factor mobility across countries

d). Constant returns to scale.

e). Perfect competition.

2. In the Heckscher Ohlin model, whether an individual gains or loses from trade

a). depends on the product he/she produces

b). depends on the industry he/she works in

c). depends on the inputs (factor of production) he/she supplies to the economy

d). depends on which firm you work for