Question

The U.S. imports cellular phones from Europe, and also exports cellular phones to Europe. An explanation for this trade pattern is:

	1.	the Hecksher-Ohlin theory of comparative advantage
	2.	the Stolper-Samuelson theorem concerning resources prices
	3.	the factor-price equalization theorem
	4.	the Ricardo theory of comparative advantage
	5.	the desire of consumers for variety

Answer 1

The given theories, from theory 1 to 4, tells about the trade pattern of the country and explains why a country will specialize in the production of certain goods and services. Also, some theories try to explain how the international trade makes the price charged of different factors equal in different countries.

Out of the given options, only the last option, "the desire of consumers for variety" explains why a country will produce a good and export it and simultaneously, import that commodity too from different nations. Consumers prefer to have different varieties with them and therefore, a country will export the variety of the good it has to offer and will also import from other countries to increase the options available to the consumers.

Therefore, the correct answer is option 5: the desire of consumers for variety.