Joleen is an economist, and she strongly supports the Heckscher-Ohlin theory of trade. She believes that free-trade theories do not capture the entire picture and often offer a narrow view when it comes to trade aspects that contribute to a nation's economic growth. Which of the following statements supports Joleen's belief?
A) Protectionist policies, subsidies, and taxes form the basis for healthy trade relations.
B) Economic growth primarily depends on trade specialization.
C) Abundant factor endowments of a country form a basis for trade.
D) Consumer preferences play a negligent role in adopting trading patterns.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory posits that countries will export goods that utilize their abundant and cheap factors of production, and import goods that require factors of production that are scarce. This theory supports the idea that a country's factor endowments (e.g., land, labor, capital) significantly influence its trading patterns, aligning with statement C.

Joleen Is an Economist, and She Strongly Supports the Heckscher-Ohlin