Suppose that country 1 is capital abundant relative to
Country 2.Both produce two goods (X and Y).Factor
Intensity reversal occurs whenever:
A)X is capital intensive in country 1 and labor intensive in country 2.
B)X is capital intensive in both countries.
C)Y is capital intensive in both countries.
D)X is capital intensive in country 1, and Y is labor intensive in country 2.

Question

Suppose that country 1 is capital abundant relative to
Country 2.Both produce two goods (X and Y).Factor­
Intensity reversal occurs whenever:
A)X is capital intensive in country 1 and labor intensive in country 2.
B)X is capital intensive in both countries.
C)Y is capital intensive in both countries.
D)X is capital intensive in country 1, and Y is labor intensive in country 2.

Quizplus · Accepted Answer

Factor-intensity reversal occurs when a good is capital intensive in one country and labor intensive in another, as described in choice A.

Suppose That Country 1 Is Capital Abundant Relative to