The ________ rests on the premise that countries differ in the type and quantity of production factors they possess.

Question

Quizplus · Accepted Answer

The theory described is the factor proportions theory, which suggests that a country's comparative advantage in producing a certain good depends on the types and quantities of production factors it possesses. The other answer choices – cost-advantage theory, competitive advantage theory, and comparative advantage theory – do not specifically refer to the role of production factors in trade.

The ________ Rests on the Premise That Countries Differ in the Type