(Figure: Home and Foreign Autarky Equilibria) If shoes are a
Laborintensive industry, which nation has more labor
Resources relative to its capital resources?

Question

(Figure: Home and Foreign Autarky Equilibria) If shoes are a
Labor­intensive industry, which nation has more labor
Resources relative to its capital resources?

Quizplus · Accepted Answer

In the labor-intensive industry, the nation with more labor resources relative to its capital resources will have a comparative advantage. In this case, Foreign has a lower autarky price for shoes, indicating that it has a comparative advantage in producing them. Therefore, Foreign has more labor resources relative to its capital resources compared to Home.

(Figure: Home and Foreign Autarky Equilibria) If Shoes Are a