Trade analysis involving multinational enterprises is in agreement with conventional trade analysis in that both emphasize
A) absolute cost differentials rather than comparative cost differentials.
B) the international movement of factor inputs rather than finished goods.
C) purely competitive markets rather than imperfectly competitive markets.
D) that production will take place in a low-cost country.

Question

Quizplus · Accepted Answer

Trade analysis, whether focusing on multinational enterprises or conventional trade, generally agrees that production tends to occur in countries where the cost of production is lower. This principle is based on the idea of comparative advantage, where countries specialize in producing goods for which they have a lower opportunity cost, leading to more efficient global production and trade patterns.

Trade Analysis Involving Multinational Enterprises Is in Agreement with Conventional