factor intensive:commodity y is capital intensive if the ratio of capital-labor used in the production of y is greater than K/L used in the commodity x.
factor abundance:1.in terms of physical unit:the total amount of captial and labour to each nation
2.in terms of relative factor price:the rental price of capital and the price of labour time in each nation.
H-O theory:a nation will export the commodity whose production requires the intensive use of the nation's relatively abundant and cheap factor
and import the commodity whose production requires the intensive use of the nation's relatively scarce and expensive factor.
in short,the labor-intensive nation should export the relatively labor-intensive commodity and import the relatively capital-intensive commodity.
H-O-S theorem: international trade will bring about equalization in the relative and absolute returns to the homogeneous factor across nation.
explanation:1.1947 is a nonrepresentative year
2.the use of 2-factor-model
3.policy of protection to the L-intensive industry.
4.human capital
5.factor-intensive reversal
6. the knowledge capital.
factor-intensive reversal:the given commodity is the L-intensive in the labor abundant nation and the k-intensive in the capital abundant nation.
increasing returns of scale:refers to the production situation where its output grows proportionately more than the increasing in input or factor of production,
intra-industry:trade in differentiated products.based on the production differentiation and economic of scale.
1.with a given import quota,an increase in demand will result in higher domestic price and
greater domestic production than with an equivalent import tariff.
2.import quota involves the distribution of import license.
3.import quota limits the amout of import in a specified level with certainty.
while the import tariff may be uncertain.
