The tendency for trade to cause factor prices to converge is known as the

Question

Quizplus · Accepted Answer

The Stolper-Samuelson theorem suggests that trade will cause factor prices (such as wages and profits) to converge between countries. This occurs because trade increases demand for the country's abundant factor, which raises its price, and decreases demand for the scarce factor, which lowers its price. Thus, trade leads to a leveling out of factor prices between countries. The other options listed are not related to this phenomenon.

The Tendency for Trade to Cause Factor Prices to Converge