In the theory of international trade, which theorem states that an increase in the endowment of one factor of production will lead to a more than proportional increase in the output of the industry which uses that factor intensively, and an absolute decrease in the output of the other industry?

💡 Solution & Explanation

The Rybczynski theorem explains how an increase in a single factor endowment leads to a disproportionate expansion in the output of the industry utilizing that factor intensively. The Stolper-Samuelson theorem focuses instead on how changes in output prices affect real factor returns.