In the following diagram, At factor prices (w/r)_I, good X is the __________, and, at factor prices (w/r)_II, good Y is The __________. A) labor-intensive good; labor-intensive good B) labor-intensive good; capital-intensive good C) capital-intensive good; labor-intensive good D) capital-intensive good; capital-intensive good

Question

Quizplus · Accepted Answer

At factor prices (w/r)_I, the relative price of X is lower than the relative price of Y, indicating that good X is relatively more labor-intensive than good Y. At factor prices (w/r)_II, the relative price of Y is lower than the relative price of X, indicating that good Y is relatively more labor-intensive than good X. Therefore, the answer is A, labor-intensive good; labor-intensive good.

In the Following Diagram