Cadmia and Rhodia specialize in the production of textiles and agricul

QUESTION

Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products.

Which of the following is illustrated by this form of trade between Cadmia and Rhodia?

A. Product life-cycle theory

B. Heckscher-Ohlin theory

C. The concept of absolute advantage

D. Mercantilism

E. Theory of national competitive advantage

ANSWER

C