The Factor Endowment Theory Suggests That

question 5

Multiple Choice

The factor endowment theory suggests that:

• A)Resources are the foundation of firm's competitive advantages
• B)National resource endowments are the foundation for comparative advantages in international trade
• C)Many factors contribute to explaining the emergence of comparative advantages
• D)Scarce resources are the foundation for comparative trade advantages

---

Definitions:

Indifference Curve

A graph that shows a combination of two goods that give a consumer equal satisfaction and utility, thereby indicating the consumer's preferences.

Bundle

A group of items or services sold together, often at a discounted price compared to purchasing each item separately.

Utility

A measure of happiness or satisfaction.

Indifference Curve

A graph showing different combinations of two goods that provide equal satisfaction and utility to a consumer.