Which of the following is NOT an assumption of the factor-endowment theory?
A) Each country has the same tastes and preferences for all products.
B) Labor and capital move effortlessly among industries within a country.
C) Each country uses the same technology for all products.
D) Comparative advantage is determined by a wide variety of factors.

Question

Quizplus · Accepted Answer

The factor-endowment theory, also known as the Heckscher-Ohlin theory, primarily attributes comparative advantage to differences in countries' endowments of labor, capital, and other resources, rather than a wide variety of factors. Choices A, B, and C are assumptions of the theory, making D the correct answer as it does not align with the theory's focus on resource endowments.

Which of the Following Is NOT an Assumption of the Factor-Endowment