Problem
Suppose that the United Kingdom and the United States have the factor endowments given in the table below:
|
|
UK
|
USA
|
|
Capital
|
60 computers
|
10 computers
|
|
Labor
|
300 workers
|
100 workers
|
Suppose further that the production requirements for a unit of manufacturing goods is two machines and eight workers, and the requirement for a unit of agricultural goods is one machine and eight workers.
Which good, manufacturing or agricultural, is relatively intensive in the use of capital? In labor? Show how you know; numerical justification is required. Which country would export agricultural goods? Why?