Question

The leontief paradox describes evidence ________. in support of the predictions of the mercantilist theory that the assumptions of the new trade theory are invalid contrary to the predictions of the factor proportions theory that the assumptions of international product life cycle theory are invalid

Answer 1

The Leontief paradox describes evidence contrary to the predictions of the factor proportions theory. Factor proportions theory on the other hand, states that a country will produce and export those goods that require resources that is abundantly available within the country.