Modern trade theory contends that the pattern of world trade is governed by
A) Differences in supply conditions and demand conditions
B) Supply conditions only
C) Demand conditions only
D) None of the above

Question

Quizplus · Accepted Answer

Modern trade theory states that the pattern of world trade is determined by the differences in supply conditions and demand conditions. Supply conditions include factors such as labor, natural resources, technology, and capital availability, while demand conditions include factors such as income levels, preference for variety, and consumer taste. Thus, both supply and demand conditions play a significant role in determining the pattern of world trade.

Modern Trade Theory Contends That the Pattern of World Trade