The conclusion that a labor-abundant country exports the good using labor intensively in production and a capital-abundant country exports the good using capital intensively in production is known as:
A) factor-intensity reversal.
B) the Heckscher-Ohlin theorem.
C) Ricardian comparative advantage.
D) the Stolper-Samuelson theorem.

Question

Quizplus · Accepted Answer

The conclusion described in the question is known as the Heckscher-Ohlin theorem, which suggests that countries will export goods that intensively use the factors they have in abundance and import goods that intensively use the factors they lack. Choice A (factor-intensity reversal) refers to a situation where the factor used more intensively in production changes when a country moves from being a net importer to a net exporter of a good, and is not relevant to this question. Choice C (Ricardian comparative advantage) and choice D (the Stolper-Samuelson theorem) are also theories related to international trade, but they do not directly describe the pattern of trade between labor-abundant and capital-abundant countries.

The Conclusion That a Labor-Abundant Country Exports the Good Using