According to physical criterion of the H-O theory of trade, a country is said to be relatively capital abundant if and only if
A)A country is having capital relatively cheap and labour relative costly
B)A country is endowed with a higher proportion of capital to labour than the other country
C)A country is having labour relatively cheap and capital relatively costly
D)A country is endowed with a higher proportion of labour to capital than the other country

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin (H-O) theory of trade posits that a country will export goods that make intensive use of the country's abundant factor of production. Thus, a country is considered relatively capital abundant if it has a higher proportion of capital to labor compared to another country.

According to Physical Criterion of the H-O Theory of Trade