Modern trade theory contends that the pattern of world trade is governed by
A) mercantilism.
B) supply conditions only.
C) demand conditions only.
D) the ability to separate the production process into tasks that can be done in different locations.

Question

Quizplus · Accepted Answer

Modern trade theory, also known as the theory of Global Value Chains, argues that the pattern of world trade is determined by the ability to separate the production process into tasks that can be done in different locations, which allows firms to take advantage of cost differences between countries and specialize in specific tasks. Therefore, option D is the best choice.

Modern Trade Theory Contends That the Pattern of World Trade