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) According to the HO model,
What product(s) will Italy export?

A) bread
B) wine
C) neither bread nor wine
D) both bread and wine