If demand reversal is the explanation for the Leontief paradox, this would imply that the demand by the United States for labor-intensive goods is relatively __________ and therefore that U.S. wages would be relatively __________ in comparison to wages in U.S. trading partners.
A) low; low
B) low; high
C) high; low
D) high; high

Question

Quizplus · Accepted Answer

The Leontief paradox refers to the unexpected finding that the United States, a capital-abundant country, exports capital-intensive goods and imports labor-intensive goods. If demand reversal is the explanation for this paradox, it would imply that the demand by the United States for labor-intensive goods is relatively low. This would lead to relatively low wages in the United States in comparison to wages in U.S. trading partners.

If Demand Reversal Is the Explanation for the Leontief Paradox