If the _____ differ(s)between two countries,this suggests the possibility for mutually advantageous trade.

Question

Quizplus · Accepted Answer

Factor endowments refer to the resources such as raw materials, labor, and capital that a country possesses. If two countries have different factor endowments, it means that they may specialize in producing different goods and can thus benefit from trading with each other. For example, a country rich in oil reserves can export oil to a country with a high demand for it but limited reserves, in exchange for goods that the oil-rich country may not produce as efficiently. Therefore, the difference in factor endowments suggests the possibility of mutually advantageous trade.

If the _____ Differ(s)between Two Countries,this Suggests the Possibility for Mutually