Examine the following two statements carefully: Statement (I): Trade between two countries takes place on account of differences in costs. Statement (II): Different countries have different factor endowments. Select the correct answer code based on economic theories of international trade:

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Economics · International Trade Theories

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation of Statement (I)

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Answer 1

Statement (I) is false but Statement (II) is true

Answer 2

Statement (I) is true but Statement (II) is false

Answer 3

Both Statement (I) and Statement (II) are individually true but Statement (II) is not the correct explanation of Statement (I)

Answer 4

Both Statement (I) and Statement (II) are individually true and Statement (II) is the correct explanation of Statement (I)

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