Factor prices tend toward equalization either through international trade or through the actual movement of the factors of production between countries.

Question

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This statement reflects the Factor Price Equalization theorem, which posits that international trade will lead to the equalization of the prices of factors of production (like labor and capital) across countries, as countries specialize according to their comparative advantages. Even without the physical movement of factors across borders, trade in goods can lead to this equalization effect. However, the actual movement of factors (like migration for labor or international investment for capital) can also contribute to equalizing factor prices directly.

Factor Prices Tend Toward Equalization Either Through International Trade or Through