Question #292821
Explain why the Heckscher–Ohlin theory is a general equilibrium model.
Expert's answer
The Heckscher-Ohlin model evaluates the equilibrium of trade between two countries that have varying specialties and natural resources. The model explains how a nation should operate and trade when resources are imbalanced throughout the world.
General equilibrium shows how supply and demand interact and tend toward a balance in an economy of multiple markets working at once.
