The factor endowment theory states that comparative advantage is explained
A) Exclusively by differences in relative supply conditions
B) Exclusively by differences in relative national demand conditions
C) Both supply and demand conditions
D) None of the above

Question

Quizplus · Accepted Answer

The factor endowment theory states that comparative advantage is exclusively explained by differences in relative supply conditions, such as the relative abundance or scarcity of natural resources, labor, and capital that a country possesses.

The Factor Endowment Theory States That Comparative Advantage Is Explained