The factor endowment theory assumes
A) Same tastes and preferences
B) Factor inputs of uniform quality
C) Same technology
D) All of the above

Question

Quizplus · Accepted Answer

The factor endowment theory assumes all of the above (same tastes and preferences, factor inputs of uniform quality, and same technology). This theory states that a country's comparative advantage in producing certain goods is determined by its factor endowments (such as labor, capital, and land) relative to other countries. It assumes that these factors are homogeneous across countries, leading to specialization based on factor abundance.

The Factor Endowment Theory Assumes