Theory based on ____________________ states that international and interregional differences in production costs occur because of differences in the supply of production factors.

Question

Quizplus · Accepted Answer

The theory of resource endowments, also known as the factor endowment theory, states that international and interregional differences in production costs occur due to differences in the supply of production factors, such as land, labor, capital, and technology. This theory suggests that countries or regions should specialize in production factors that they have in abundance and trade with those that have a scarcity.

Theory Based on ____________________ States That International and Interregional Differences