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Unlike Its Neighboring Countries, Gafkhan, an Asian Country, Has Abundant

Question 1

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Unlike its neighboring countries, Gafkhan, an Asian country, has abundant natural resources. Gafkhan develops industries that are based on natural resources, such as mining and agriculture. A neighboring country, Lidom, specializes in technology based products. This facilitates trade between both the countries as they have different factor endowments. The trade pattern between Gafkhan and Liam restates the validity of the _____.


A) Ricardian trade theory
B) theory of economies of scale
C) Heckscher-Ohlin theory of trade
D) theory of overlapping demand

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