4. The table below shows the total endowments of labour and capital in Germany and
Austria, respectively.
Germany
Workers 100
Machines 20
Austria
Workers 10
Machines 4
Assess all the statements below and judge which of them is true and which is false.
Provide a short justification for your assessment.
According to the Heckscher-Ohlin model…
a) …both countries are comparatively abundant in labour.
b) …Austria is comparatively abundant in capital.
c) …Germany exports should be in goods that use either labour or capital, depending on the
good.
d) …Germany exports should be in goods that intensively use labour in production.
e) …Austria will lose from trade, since it has both much less labour and capital endowment.
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