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Which trade theory considers the factor endowments (such as labor, capital, and natural resources) of countries to determine trade patterns?
  • a)
    Theory of Absolute Advantage
  • b)
    Theory of Comparative Advantage
  • c)
    Heckscher-Ohlin Theory
  • d)
    New Trade Theory
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Which trade theory considers the factor endowments (such as labor, cap...
The Heckscher-Ohlin Theory, also known as the factor-proportions theory, asserts that a country will export goods that use its abundant factors of production more intensively and import goods that use its scarce factors more intensively. It explains trade patterns based on a country's factor endowments.
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Which trade theory considers the factor endowments (such as labor, capital, and natural resources) of countries to determine trade patterns?a)Theory of Absolute Advantageb)Theory of Comparative Advantagec)Heckscher-Ohlin Theoryd)New Trade TheoryCorrect answer is option 'C'. Can you explain this answer?
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