Question

Country A exports electronic goods from Country B although there are no underlying differences in factor endowments between the two countries. Which of the following theories explains this anomaly?


A. Comparative advantage theory

B. New trade theory

C. Ricardo's theory

D. Smith's theory

Answer 1

Answer:

B. New trade theory

Explanation:

New trade theory -

This theory of new trade was given back in the 1970s , which enables to forecasts the pattern of international trade .

It is an economic theory , and helps to provide the information of countries that are trade partners when they are trading for the same type of goods and services .

This type of trading in seen for the trade of automobiles , food and even for electronics .

Similarly , Bothe country A and B exports same type of electronic goods , and there by explains the new trade theory .