If country I is defined as "relatively capital-abundant" in relation to country II by the "price" (or "economic") definition of factor abundance, then the price of labor relative to the price of capital is __________ in country I than in country II, and the Heckscher-Ohlin theorem would suggest that country I would export relatively __________ goods to country II.
A) higher; capital-intensive
B) higher; labor-intensive
C) lower; capital-intensive
D) lower; labor-intensive

Question

Quizplus · Accepted Answer

If country I is relatively capital-abundant, then it has a higher price of capital and a lower price of labor compared to country II. This means that relatively capital-intensive goods will have a lower cost of production in country I, resulting in country I exporting relatively capital-intensive goods to country II. Therefore, the answer is A.

If Country I Is Defined as "Relatively Capital-Abundant" in Relation