(Figure: Home and Foreign Autarky Equilibria) If shoes are a labor-intensive industry, which nation is labor abundant?
A) Home
B) Foreign
C) neither Home nor Foreign
D) both Home and Foreign

Question

(Figure: Home and Foreign Autarky Equilibria) If shoes are a labor-intensive industry, which nation is labor abundant? 
A) Home 
B) Foreign 
C) neither Home nor Foreign 
D) both Home and Foreign

Quizplus · Accepted Answer

If shoes are a labor-intensive industry and the foreign nation has a lower wage rate (as indicated by the steeper slope of the PPF in Foreign), then it can be inferred that Foreign is labor abundant.

(Figure: Home and Foreign Autarky Equilibria) If Shoes Are a Labor-Intensive