According to economic theory, there are four main factors of production – land, labour, capital, and entrepreneurship. In the given options, first three are the factors of production while the fourth option of Product is not the main factor of production.

Which of the following is normally regarded as a factor of production?

Land and labour are two essential factors of production. Since the real work of production is done by labour it is considered as the active factor of production.

What is the theory of factor endowment?

The factor endowment theory of international trade contains three messages: First, each country will export those goods in which its abundant factors have comparative advantages; second, a country’s abundant factors gain from trade and its scarce factors lose; and, third, such factor endowment trade tends to bring …

Who proposed the factor endowment theory?

Bertil Ohlin
The theory was developed by the Swedish economist Bertil Ohlin (1899–1979) on the basis of work by his teacher the Swedish economist Eli Filip Heckscher (1879–1952).

Which type of incentive makes it more profitable?

The correct answer is Positive incentive. This sort of incentive is more profitable after the successful completion of a specific strategy in a corporate firm or organisation.

What is the government’s aim in setting quotas?

The government’s aim in setting quotas is to increase sales of domestic goods. Further Explanations: Import quotas are customs barrier establishment by the government to limit the number of imported products.

What are the four factor endowments?

Factor endowments are the land, labor, capital, and resources that a country has access to, which will give it an economic comparative advantage over other countries.

Which of the following is one of the implications of new trade theory?

Which of the following is a distinctive implication of the New New Trade Theory (i.e., the Melitz Model), not present in the New Trade Theory? a. Trade increases average productivity as more productive firms expand to export. Trade encourages research and development and thus the creation of new products.

What are the criticisms of factor endowment theory?

The assumptions that drive the factor endowment theory may be flawed. It first assumes the same technology, and also assumes arbitrary borders. However, factors like borders play a large role in how much trade occurs; Seattle, for instance, conducts more trade with Boston than it does with Vancouver.

What is Krugman new trade theory?

Krugman developed New Trade Theory as an alternative to older theories that explain patterns of international trade as based on comparative advantage and natural resource endowments. Krugman’s New Economic Geography grew out of New Trade Theory.