Question

modern theory of international trade is based on the assumptions of ____
a. trade between many countries
b. free trade
c. labour intensive production in all countries
d. trade of goods and services ​

Answer 1

Answer:

The modern theory is based on the assumption that the two products in the two countries are identical. This is an unrealistic assumption. The products in different countries are usually differentiated.

Explanation:

Mark me as brainliest

Answer 2

It is based on the assumption of free trade.

• The theory was proposed by Bertil Ohlin.
• It attempts to demonstrate that international trade is merely a subset of inter-local or inter-regional trade, and that no separate theory of international trade is required.
• Some of the underlying assumptions of the theory are -

1. Free trade
2. Full employment
3. Exclusion of transportation costs
4. Perfect Competition