If Australia has more land per worker,and Belgium has more capital per worker,then if trade began between these two countries
A) the real income of landowners in Belgium would decline.
B) the real income of capital owners in Australia would increase.
C) the real income of labor in Australia would decline.
D) the real income of labor in Belgium would decline.
E) the real income of labor in both countries would decline.

Question

Quizplus · Accepted Answer

According to the Heckscher-Ohlin model, a country will export goods that use its abundant factors intensively. Australia, with more land, will export land-intensive goods, and Belgium, with more capital, will export capital-intensive goods. This trade will increase the demand for land in Australia and capital in Belgium, benefiting landowners in Australia and capital owners in Belgium, while potentially harming landowners in Belgium.

If Australia Has More Land Per Worker,and Belgium Has More