Question

What is the basis of international trade according to modern theory?​

Answer 1

Answer:

The basis of international trade lies in the differences in relative commodity prices which ultimately depend upon differences in relative scarcities of factors of production in the two countries. Relative price differences lead to absolute price differences when a rate of exchange is fixed.

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Answer 2

Explanation:

The basis of international trade lies in the differences in relative commodity prices which ultimately depend upon differences in relative scarcities of factors of production in the two countries. Relative price differences lead to absolute price differences when a rate of exchange is fixed.

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