If two nations have the same endowments of factors, they can engage ininternational trade1) based on absolute advantage.2) based on comparative advantage.3) based on relative advantage.4) based on economies of scales.

Factor endowment is the amount of factors of production that a country possesses. Labor and capital…

If two nations have the same endowments of factors, they can engage in international trade O 1) based on absolute advantage. 2) based on comparative advantage. 3) based on relative advantage. 4) based on economies of scales.

If two nations have the same endowments of factors, they can engage in international trade O 1) based on absolute advantage. 2) based on comparative advantage. 3) based on relative advantage. 4) based on economies of scales.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

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If two nations have the same endowments of factors, they can engage in
international trade
1) based on absolute advantage.
2) based on comparative advantage.
3) based on relative advantage.
4) based on economies of scales.

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