The factor-endowment theory asserts that specialization and trade tends to encourage an equalization in the relative resource prices of trading partners.

Question

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The factor-endowment theory predicts that countries with different endowments of factors of production will specialize in producing goods that use their abundant factors more intensively, leading to an equalization of relative resource prices between trading partners.

The Factor-Endowment Theory Asserts That Specialization and Trade Tends to Encourage