In the factor-proportions theory:
A) the production possibilities frontier is bowed in toward the origin.
B) labor is the only factor of production.
C) the country with the largest amount of labor will have a comparative advantage in labor-intensive products.
D) the country's comparative advantage depends on its relative endowment of the various factors of production.
E) capital is the only factor of production.

Question

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The factor-proportions theory, also known as the Heckscher-Ohlin theory, states that a country's comparative advantage is determined by its relative abundance of factors of production, such as labor and capital.

In the Factor-Proportions Theory