Use the table for the following question
Suppose that all goods are made with two factors-labor and capital. The table below shows the total endowments of each factor in the United States and Canada. Table 4.1
Endowment of Labor and Capital

-Based on Table 4.1,according to the Heckscher-Ohlin Theorem,U.S.exports should be goods that
A)intensively use labor input.
B)intensively use capital input.
C)use capital and labor in about equal proportions.
D)use either labor or capital input, depending on the good.

Question

Use the table for the following question
Suppose that all goods are made with two factors-labor and capital. The table below shows the total endowments of each factor in the United States and Canada. Table 4.1
Endowment of Labor and Capital
 
-Based on Table 4.1,according to the Heckscher-Ohlin Theorem,U.S.exports should be goods that
A)intensively use labor input. 
B)intensively use capital input. 
C)use capital and labor in about equal proportions. 
D)use either labor or capital input, depending on the good.

Quizplus · Accepted Answer

According to the Heckscher-Ohlin theorem, countries will export goods that use their abundant factor of production (in this case, labor) relatively more intensively than countries with scarce factor endowments. Since the United States has a larger endowment of labor relative to capital than Canada, it should export goods that intensively use labor input. Therefore, the correct choice is A, which indicates goods that intensively use labor input.

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