The ________ theory states that countries produce and export goods that require resources available in abundance and import goods that require resources in short supply.
A) new trade
B) absolute advantage
C) international product life cycle
D) factor proportions

Question

Quizplus · Accepted Answer

The factor proportions theory, also known as the Heckscher-Ohlin theory, suggests that countries will produce and export goods that require factors of production (such as labor, land, or capital) that are abundant in their country, while importing goods that require factors that are in short supply. This theory emphasizes the importance of a country's endowment of resources and factors of production in determining its trade patterns.

The ________ Theory States That Countries Produce and Export Goods