8. The factor-price equalization theory and transportation costs Which of the following statements about the factor-price...

8. The factor-price equalization theory and transportation costs

Which of the following statements about the factor-price equalization theory and the effects of transportation costs are correct? Check all that apply.

In trading nations, the cheap resource becomes even less expensive, and the expensive resource becomes even more expensive, which facilitates the growth of trade.

Differences in transportation costs across countries are a source of comparative advantage.

The factor-endowment theory accounts for transportation costs and other trade barriers.

When nations trade, the cheap resource becomes relatively more expensive, and the expensive resource becomes relatively less expensive, until price equalization occurs.

Which of the following statements about transportation costs are correct? Check all that apply.

When transportation costs rise, markets tend to substitute goods that are from closer locations.

Transportation costs have declined due to technological improvements for transporting goods.

International transportation costs are increasing everywhere in the world except in the United States.

Since the 1960s, transportation costs, as a percentage of the value of all U.S. imports, increased twofold.

The decline in the U.S. relative cost of international transportation has contributed to a higher volume of trade.

Expert Solution

Rahul Sunny answered 1 hour ago

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