The price criterion if the H-O theory of trade lays down that
A)A country having labour relatively cheap and capital relatively costly is capitalabundant
B)A country having capital relatively cheap and labour relatively costly is labourabundant
C)A country having both capital and labour cheap is capital-abundant
D)A country having capital relatively cheap and labour relatively costly is capital abundant

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin (H-O) theory of trade, also known as the factor proportions theory, suggests that a country will export goods that make intensive use of the country's abundant factor of production. Thus, if capital is relatively cheap (abundant) and labor is relatively costly (scarce), the country is considered capital-abundant according to the H-O theory.

The Price Criterion If the H-O Theory of Trade Lays