The factor proportions theory holds that countries should concentrate production on those products that use their most abundant production factors.

Question

Quizplus · Accepted Answer

The factor proportions theory, also known as the Heckscher-Ohlin theory, suggests that countries should specialize in producing and exporting goods that use their abundant factors of production. This theory assumes that countries differ in their relative endowments of factors of production, such as land, labor, and capital. By specializing in the production of goods that use their abundant factors, countries can achieve greater efficiency and productivity.

The Factor Proportions Theory Holds That Countries Should Concentrate Production