Suppose that country 1 is capital abundant relative to country 2. Both produce two goods (X and Y). Factor-intensity reversal occurs whenever:
A) X is capital intensive in country 1 and labor intensive in country 2.
B) X is capital intensive in both countries.
C) Y is capital intensive in both countries.
D) X is capital intensive in country 1, and Y is labor intensive in country 2.

Question

Quizplus · Accepted Answer

Factor-intensity reversal occurs when the factor intensities of producing goods are reversed between countries. This means a good that is capital intensive in one country is labor intensive in the other, as described in option A.

Suppose That Country 1 Is Capital Abundant Relative to Country