The factor-proportions theory of international trade predicts:
A) who benefits and who loses from trade.
B) which factors are abundant.
C) the income distribution effects of trade.
D) which goods will be exported.
E) the size of transportation costs.

Question

Quizplus · Accepted Answer

The factor-proportions theory, also known as the Heckscher-Ohlin theory, predicts that countries will export goods that use their abundant factors of production intensively. This theory helps explain the types of goods a country will specialize in and export based on its factor endowments.

The Factor-Proportions Theory of International Trade Predicts