Question

6.
The modern theory of international trade predicts that as a result of trade, the difference in factor
prices between nations
(a) Diminishes
(b) Increases
(c) Remains unchanged
(d) Any of the above is possible

Answer 1

Any of tbe above is possible

Answer 2

Explanation:

the modern theory of international trade is an extension of the general equilibrium theory of value. ... Just as differences in individual capabilities are the cause of exchange between individuals, similarly differences in factor prices is the cause of international trade.