According to the factor-proportions theory, the source of comparative advantage is a country's:
A) physical size.
B) population.
C) advertising.
D) factor endowments.
E) geographical location.

Question

Quizplus · Accepted Answer

The factor-proportions theory, also known as the Heckscher-Ohlin theory, posits that a country's comparative advantage in producing certain goods is determined by its relative abundance of production factors (such as land, labor, and capital). Therefore, countries will export goods that require production factors they have in abundance and import goods that require production factors they lack.

According to the Factor-Proportions Theory, the Source of Comparative Advantage