If skilled labor is physically more abundant relative to unskilled labor in country I than in Country II, but yet skilled labor is relatively higher-priced in comparison to unskilled Labor in country I than in country II, this phenomenon could be accounted for by
A) factor-intensity reversal.
B) the "specific factors" model.
C) demand reversal.
D) factor-price equalization between the two countries.

Question

Quizplus · Accepted Answer

Demand reversal can explain this phenomenon as it suggests that the demand for skilled labor in country I is higher, leading to higher prices despite its abundance.

If Skilled Labor Is Physically More Abundant Relative to Unskilled