Economics · International Trade Theories

Which of the following statements regarding the Rybczynski Theorem is/are correct? 1. At constant goods prices, an increase in the endowment of one factor of production leads to an absolute expansion of the output of the good using that factor intensively. 2. An increase in the capital stock of a nation, assuming constant prices, results in an absolute contraction in the output of the labour-intensive commodity. 3. The theorem predicts that an increase in one factor endowment will lead to a proportional increase in the output of both commodities in the 2x2x2 model. Select the correct answer using the code given below: