Based on the recognition that states differ in their resource endowments of land, labor, and capital, a theory developed arguing that states should trade based on their ________, whereby each state produces and exports those products that it can produce most efficiently relative to other states.

Question

Quizplus · Accepted Answer

The theory described suggests the concept of comparative advantage, where each state specializes in producing and exporting those goods that they can produce most efficiently relative to other states. This is based on differences in resource endowments amongst states.

Based on the Recognition That States Differ in Their Resource