Assume that there are two factors, capital and land, and that the U.S. is relatively capital abundant while Chile is relatively land abundant. According to the factor-proportions model:
A) Chilean landowners should support U.S.-Chile free trade.
B) Chilean capitalists should support U.S.-Chile free trade.
C) U.S. capitalists should oppose U.S.-Chile free trade.
D) U.S. capitalists and Chilean capitalists both oppose free trade.
E) There is no support for free trade in either country.

Question

Quizplus · Accepted Answer

According to the factor-proportions model, owners of the abundant factor in each country benefit from free trade. Since Chile is land abundant, Chilean landowners would benefit from free trade with the U.S. and thus support it.

Assume That There Are Two Factors, Capital and Land, and That