Assume that the United States is scarce in labor and abundant in capital.According to the factor price equalization theory,free trade policies would tend to be be opposed by ______ in the United States.

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According to the factor price equalization theory, free trade policies would tend to lead to an increase in the demand for labor and therefore an increase in wages. However, in a country like the United States that is scarce in labor, this increase in wages would result in higher costs for firms and a decrease in profits for capital. Therefore, capital would tend to oppose free trade policies while labor would tend to support them.

Assume That the United States Is Scarce in Labor and Abundant