If two countries are very different in relative factor abundance,then empirical support for which of the following would less likely?
A) the Factor Price Equalization Theorem
B) the Heckscher-Ohlin Theorem
C) the Law of One Price
D) the Law of Demand
E) the Gravity Theorem

Question

Quizplus · Accepted Answer

The Factor Price Equalization Theorem predicts that, in the absence of barriers to trade, the prices of factors of production (such as labor) will equalize across countries as trade occurs. However, if two countries are very different in relative factor abundance (such as one having an abundance of labor and the other an abundance of capital), then the prices of factors of production may not equalize even with trade. Therefore, empirical support for the Factor Price Equalization Theorem would be less likely in this scenario.

If Two Countries Are Very Different in Relative Factor Abundance,then