Question
Economics Question on Business Finance
Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R.
Assertion A : According to the Heckscher-Ohlin model, free trade results in equalisation of factor prices across nations.
Reason R : This is because the model assumes perfect international mobility of the factors of production.
In the light of the above statements, choose the correct answer from the options given below:
A
Both A and R are true and R is the correct explanation of A
B
Both A and R are true but R is NOT the correct explanation of A
C
A is true but R is false
D
A is false but R is true
Answer
A is true but R is false
Explanation
Solution
The correct option is(C): A is true but R is false