According to which theory, a country that is relatively labor abundant should specialize in the production and export of that product which is relatively labor intensive?

Question

Quizplus · Accepted Answer

The Theory of Factor Proportions, also known as the Heckscher-Ohlin theory, suggests that a country should specialize in and export products that use relatively abundant factors of production, while importing products that use relatively scarce factors of production. In the case of a labor-abundant country, it is expected to specialize in and export products that require relatively more labor and less of other factors of production. Therefore, choice C is the correct answer. Choice A relates to the Theory of Comparative Advantage, which suggests that a country should specialize in and export products that it can produce at a lower opportunity cost than other countries, regardless of factor endowments. Choice B refers to the Theory of Absolute Advantage, which suggests that a country should specialize in and export products that it can produce with greater efficiency than other countries. Choice D is not a recognized economic theory.

According to Which Theory, a Country That Is Relatively Labor