The Case of the Missing Trade refers to
A) the fact that factor trade is less than predicted by the Heckscher-Ohlin theory.
B) the 9th volume of the Hardy Boys' Mystery series.
C) the fact that world exports does not equal world imports.
D) the fact that the Heckscher Ohlin theory predicts much less volume of trade than actually exists.
E) the fact that the Heckscher Ohlin theory never applies to China-U.S. trade practices.

Question

Quizplus · Accepted Answer

The Case of the Missing Trade refers to the fact that factor trade (trade in factors of production such as labor and capital) is less than predicted by the Heckscher-Ohlin theory. The theory predicts that countries will specialize in producing goods that use their abundant factors of production and then trade with countries that have different factor endowments. However, in reality, countries often trade in goods that use similar factors of production, leading to less factor trade than predicted.

The Case of the Missing Trade Refers to