Compared to Ricardian trade theory, modern trade theory provides a more general view of comparative advantage since it is based on all factors of production rather than just labor.

Question

Quizplus · Accepted Answer

Modern trade theory, also known as the factor-proportions theory, takes into account all factors of production, including capital and natural resources, in determining comparative advantage. Ricardo's theory, on the other hand, focused solely on labor as the source of comparative advantage. Therefore, option A is correct.

Compared to Ricardian Trade Theory, Modern Trade Theory Provides a More