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Why Is It That North-South Trade in Manufactures Seems to Be

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Essay

Why is it that North-South trade in manufactures seems to be consistent with the results or expectations generated by the factor-proportions theory of international trade, whereas North-North trade is not?


Definitions:

Economic Rent

The extra income earned by a resource over and above its opportunity cost, often due to natural advantages or market conditions.

Inelastic Demand Curve

Represents a situation where the demand for a product changes by a smaller percentage than changes in its price, indicating consumers' insensitivity to price changes.

Perfectly Elastic

A situation where the demand or supply for a product is infinitely responsive to changes in price, shown as a horizontal line on a graph.

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