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?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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