France and Italy only trade with each other. Each produces wine and bread. The production of bread is relatively capital intensive, and the production of wine is relatively labor intensive. France is relatively abundant in capital, while Italy is relatively abundant in labor. 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.
Correct Answer:
Verified
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