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5 January, 13:08

It seems evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

O True

O False

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Answers (1)
  1. 5 January, 16:03
    0
    TRUE

    Explanation:

    The statement is of H. O theory of Advantage in International Trade.

    It states that : Countries would have advantage in producing good which uses its abundant factor intensively.

    If country A has relatively more labour than capital, comparatively than country B : It will have cheaper labour & will produce relatively more labour intensive good (good using more labour), at a lower cost and better competitive advantage than Country B.
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