Trade will tend to equalize factor prices.

Question

Quizplus · Accepted Answer

Trade allows countries to specialize in producing and exporting goods that they have a comparative advantage in. This can increase efficiency and productivity, which can lead to a more efficient allocation of resources and higher factor prices. In addition, trade can lead to the transfer of technology and knowledge, which can also increase productivity and factor prices. As a result, trade has the potential to help equalize factor prices between countries over time.

Trade Will Tend to Equalize Factor Prices