The difference between Ricardo's theory and the Heckscher-Ohlin theory is that the Heckscher-Ohlin theory
A) makes more simplifying assumptions.
B) cannot be subjected to empirical tests.
C) actually predicts trade patterns with greater accuracy.
D) argues that the pattern of international trade is determined by differences in national factor endowments.
E) suggests that trade is a positive-sum game in which all countries that participate realize economic gains.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory argues that international trade patterns are determined by differences in national factor endowments, such as labor, land, and capital, unlike Ricardo's theory which focuses on comparative advantage based on productivity differences.

The Difference Between Ricardo's Theory and the Heckscher-Ohlin Theory Is