FACTORS PROPORTIONS MODEL

Output per unit of Capital Output per unit of Labour MANUFACTURE 4 20 AGRICULTURE 1 2 Factor Endowments Capital Labour HOME 750 250 FOREIGN 100 25 (1 point) (a) State the Heckscher-Ohlin Theorem. (9 points) (b) Use the data above to establish the basis behind the Heckscher-Ohlin Theorem. [You may wish to use diagrams or calculations if it helps clarify your answer)