SCENARIO: FRANCE AND ITALY

SCENARIO: FRANCE AND ITALY
(1) France and Italy only trade with each other; (2) each
Produces wine and bread; (3) The production of bread is
Relatively capital intensive, and the production of wine is
Relatively labor intensive, and (4) France is relatively
Abundant in capital, while Italy is relatively abundant in
Labor.
Reference: Ref 4­6
(Scenario: France and Italy) Which of the following
Statements is CORRECT?

A) Italy has a larger labor force than France.
B) France has a larger labor force than Italy.
C) The ratio of Italy's total capital stock to its labor force is smaller than the same ratio for France.
D) The ratio of Italy's total capital stock to its labor force is larger than the same ratio for France.