The neoclassical theory that seeks to explain comparative advantage in terms of factor abundance is the:
A)Gravity Theory.
B)Imperfect Market Theory.
C)New Trade Theory.
D)Hecksher and Ohlin model.

Question

Quizplus · Accepted Answer

The Hecksher and Ohlin model, also known as the factor abundance theory or factor proportions theory, is a neoclassical theory that seeks to explain comparative advantage in terms of factor abundance. It states that countries will specialize in the production of goods that use their abundant factors of production more intensively, and trade with other countries to obtain goods that use their scarce factors of production more intensively.

The Neoclassical Theory That Seeks to Explain Comparative Advantage in Terms