The correct answer is indeed b. evidence against the Heckscher-Ohlin model. Wassily Leontief’s results, as revealed in his empirical studies, provided compelling evidence that contradicted the predictions of the Heckscher-Ohlin model. To understand why this is the case, let’s delve into the details of Leontief’s work and then explain why the other options are not correct.

Correct Answer (b): Evidence against the Heckscher-Ohlin model:

Wassily Leontief, a Russian-American economist, conducted pioneering research in the 1950s that analyzed the structure of international trade and its relationship with the factor proportions theory, which is the basis of the Heckscher-Ohlin model.

The Heckscher-Ohlin model, named after economists Eli Heckscher and Bertil Ohlin, posits that countries will export goods that require factors of production (such as labor or capital) that they have in abundance and import goods that require factors of production in which they are relatively scarce.

In other words, it predicts that a capital-abundant country will export capital-intensive goods and import labor-intensive goods, while a labor-abundant country will do the opposite.

Leontief’s groundbreaking study, known as the Leontief Paradox, involved analyzing the actual trade patterns of the United States, a capital-abundant country, to test the predictions of the Heckscher-Ohlin model. He found that the United States was exporting more labor-intensive goods and importing more capital-intensive goods, which directly contradicted the model’s expectations.

Leontief’s results were significant because they raised questions about the validity of the Heckscher-Ohlin model and the fundamental assumptions on which it is based.

The model, which was one of the cornerstones of international trade theory, could not explain the real-world trade patterns of the United States. This paradox challenged economists to reevaluate their understanding of the determinants of international trade and factor endowments.

Now, let’s explain why the other options are not correct:

a. Evidence against the Ricardian model:

The Ricardian model, developed by economist David Ricardo, is another classic theory of international trade. It is based on the principle of comparative advantage, which suggests that countries should specialize in producing goods in which they have a relative efficiency or productivity advantage.

Leontief’s results did not challenge the Ricardian model. In fact, the Ricardian model and the Heckscher-Ohlin model are distinct in their assumptions and predictions. While the Heckscher-Ohlin model focuses on factor endowments, the Ricardian model emphasizes differences in technology and productivity. Leontief’s findings primarily questioned the Heckscher-Ohlin model, not the Ricardian model.

c. Support for the Ricardian model:

Leontief’s results did not provide support for the Ricardian model either. As mentioned earlier, his research primarily cast doubt on the Heckscher-Ohlin model. The Ricardian model is based on the idea of comparative advantage driven by differences in technology and opportunity costs, while the Heckscher-Ohlin model is based on the factor endowments of countries.

Since Leontief’s paradox was related to factor endowments and the Heckscher-Ohlin model’s predictions, it did not offer direct support to the Ricardian model.

d. Support for the Heckscher-Ohlin model:

Leontief’s findings definitely did not support the Heckscher-Ohlin model. In fact, his research directly contradicted the model’s predictions. According to the Heckscher-Ohlin model, a capital-abundant country like the United States should export capital-intensive goods, but Leontief’s empirical analysis showed that the U.S. was exporting more labor-intensive goods.

This inconsistency undermined the predictions of the Heckscher-Ohlin model, making it evident that Leontief’s results were not supportive of this theory.

In conclusion, the correct answer is “b. evidence against the Heckscher-Ohlin model” because Wassily Leontief’s empirical research revealed a trade pattern that directly contradicted the predictions of the Heckscher-Ohlin model.

This paradox prompted economists to revisit their understanding of international trade and the factors that influence it, ultimately leading to further research and refinements in trade theory.

The other options (a, c, and d) are not correct because Leontief’s work did not challenge the Ricardian model, did not provide support for the Ricardian model, and certainly did not support the Heckscher-Ohlin model; instead, it raised questions about its applicability in explaining real-world trade patterns.