The theory of resource endowment
A. explains why France sends cosmetics, wine, and clothing to Chile.
B. states that a nation will trade goods that can be produced with the production factor that is most abundant.
C. explains why transportation costs may be ignored when calculating the costs of imports.
D. shows how larger countries will have an advantage in trade.
E. explains why an automobile can be made either by hand or by a capital-intensive process.
Answer: B
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