This form of trade between the two countries illustrates the Heckscher-Ohlin theory.
The Republic of Monaslu is exporting what it can most efficiently produce and the country of Ingora is exporting what it can most efficiently produce. They are also both importing goods that they need.
<h3>Further Explanation</h3>
the Hecksher-Ohlin theory
This theory is based around the idea that countries should export goods or labor that they are the most efficient at producing. This efficiency also means that they should be able to easily turn a profit on these goods or services. Examples would be a country who has a great deal of oil reserves but not enough agriculture. The country would export its oil to then import agricultural products.
the mercantilist doctrine
This doctrine is in full support of domestic goods. The government regulates trade in such a way that promotes domestic goods over imports. Imported goods are heavily regulated through tariffs, while domestic goods are heavily protected.
the product life-cycle theory
This theory states that there are three stages in the life-cycle of a product that enters the market. The first stage is the product introduction. This stage is just as it sounds, the product enters the market. It first starts off in the local market with very little production because it is new and not well known. There are some changes made to the product to make it better and possibly less expensive to produce. As it becomes more popular production and distribution increases. The second stage is the maturity stage. The product is being distributed internationally. Changes to the products are still ongoing, but fewer. Production facilities are being built in various locations so as to produce locally and reduce cost. The last stage is product standardization and streamline of manufacturing. At this stage, the product has undergone it's final iteration. The production facilities are standardized so as to reduce cost. Also, other similar products have begun to flood the marketplace.
the theory of absolute advantage
This is when a producer can produce the same quantity and quality of goods or services as another producer for lesser cost. Therefore it is more efficient and cost effective so it is more profitable.
<h3>Answer Details</h3>
Level: College
Subject: Business
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Keywords</h3>
the Heckscher-Ohlin theory, the mercantilist doctrine, the product life-cycle theory, the theory of absolute advantage.
<h3>Learn More</h3>
the Heckscher-Ohlin: brainly.com/question/4626740
Which of the following is NOT a proposition of the Heckscher-Ohlin model?: brainly.com/question/12978629
