Factor proportions theory argues that a country should produce and export goods ________.

Question

Quizplus · Accepted Answer

According to factor proportions theory, a country should produce and export goods that require the factors of production that are most abundant in that country. This is because abundant factors of production are relatively cheaper, and therefore, production is more efficient and cost-effective. By specializing in the production of goods that require abundant factors, a country can maximize its production and trade gains.

Factor Proportions Theory Argues That a Country Should Produce and Export