Factor Proportions Theory Differs from the Theory of Comparative Advantage

question 52

Multiple Choice

Factor proportions theory differs from the theory of comparative advantage in that the focus of factor proportions theory is on the ________.

• A) usage of the most abundant factors of production, while the focus of the comparative advantage theory is on the productivity of the production process
• B) accumulation of financial wealth in the form of gold by encouraging imports and discouraging exports, while the comparative advantage theory focuses on usage of the most abundant factors of production
• C) productivity of the production process, while the comparative advantage theory focuses on maximization of production and consumption
• D) minimization of trade surpluses, whereas the comparative advantage theory focuses on the mercantilist idea that international trade is a zero-sum game

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Definitions:

Metaphor

A cognitive tool that allows people to understand an abstract concept in terms of a dissimilar, concrete concept.

Experiential Association

The linking of two or more experiences in the mind, forming a connection between them that can influence thoughts and behavior.

Schema

A mental structure or idea that assists in arranging and understanding information from our surroundings.

Self-fulfilling Prophecy

A belief or expectation that directly or indirectly causes itself to become true, due to positive feedback between belief and behavior.