In the context of international trade, the 'Stolper-Samuelson Theorem' predicts that:
A. An increase in the relative price of a good raises the real return to the factor used intensively in its production
B. Only labour always gains from trade
C. Factor prices are independent of goods prices
D. Trade benefits all factors of production equally
Answer: Option A
Solution (By JKSSB Mock Tests)
The Stolper-Samuelson theorem states that a rise in the relative price of a good increases the real return to the factor used intensively in that good and reduces the real return to the other factor.
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