The _____ states that when factors are allowed to move freely among trading nations,efficiency increases,which leads to price of factors becoming equal among countries.

Question

Quizplus · Accepted Answer

The statement given in the question is a direct definition of the factor-price equalization theory. This theory suggests that factors of production, such as labor and capital, will flow from countries with a surplus to those with a deficit, leading to an increase in efficiency and ultimately resulting in equal factor prices across countries.

The _____ States That When Factors Are Allowed to Move