Question

Which one of the following is NOT an assumption made in the standard 2x2x2 Heckscher-Ohlin analysis?

1. A given relative commodity price ratio, say (P_X/P_Y)1, can be associated with more than one relative factor price ratio, e.g., say with (w/r)₁ as well as with (w/r)₂.

2. The production function for a given good is the same in both countries.

3. Tastes and preferences (i.e., the community indifference curve maps) are identical in the two countries.

4. If a particular good is the relatively labor-intensive good at one set of relative factor prices, then it is also the relatively labor-intensive good at any other set of relative factor prices.