Suppose two countries, France and Germany, use only capital and labor for production. Factor endowments of the nations are presented in the table below. Capital Labor France 2200 800 Germany 880 220 a Which country is labor-abundant? Which country is capital-abundant? b. Assume that both countries produce two goods, cars and wine. If cars are capital-intensive and wines are labor-intensive, which country should specialize in the production of cars? Which country should specialize in the production of wines? Explain why?

Suppose two countries, France and Germany, use only capital and labor for production. Factor endowments of the nations are presented in the table below. Capital Labor France 2200 800 Germany 880 220 a Which country is labor-abundant? Which country is capital-abundant? b. Assume that both countries produce two goods, cars and wine. If cars are capital-intensive and wines are labor-intensive, which country should specialize in the production of cars? Which country should specialize in the production of wines? Explain why?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.3P

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