Suppose that we are in a two-factor, two-country world where the factors of production Are labor (L) and land (T), the returns to the factors are the wage rate (w) and the rental Rate on land (t), and the countries are country A and country B. In this situation, country A is land-abundant relative to country B by the physical definition of relative factor Abundance if __________, and country A is land-abundant relative to country B by the Price (or economic) definition if __________. A) (L/T)_A (w/t)_B B) (L/T)_A (w/t)_B D) (L/T)_A (L/T)_B; (w/t)_A

Question

Suppose that we are in a two-factor, two-country world where the factors of production Are labor (L) and land (T), the returns to the factors are the wage rate (w) and the rental Rate on land (t), and the countries are country A and country B. In this situation, country A is land-abundant relative to country B by the physical definition of relative factor Abundance if __________, and country A is land-abundant relative to country B by the Price (or economic) definition if __________. A) (L/T)_A < (L/T)_B; (w/t)_A > (w/t)_B B) (L/T)_A < (L/T)_B; (w/t)_A < (w/t)_B C) (L/T)_A > (L/T)_B; (w/t)_A > (w/t)_B D) (L/T)_A > (L/T)_B; (w/t)_A < (w/t)

Quizplus · Accepted Answer

Country A is land-abundant relative to country B by the physical definition if the ratio of labor to land (L/T) in country A is less than in country B. By the price definition, country A is land-abundant if the wage to rental rate ratio (w/t) in country A is greater than in country B, indicating that land is relatively cheaper in country A.

Suppose That We Are in a Two-Factor, Two-Country World Where