Pearson eText International Economics -- Access Card
7th Edition
ISBN: 9780136849926
Author: Gerber, JAMES
Publisher: PEARSON
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Question
Chapter 4, Problem 1SQ
To determine
Explain the relative labor or capital abundancy of two countries.
Expert Solution & Answer
Explanation of Solution
The capital labor ratio of the US can be calculated as follows:
The capital labor ratio of Canada can be calculated as follows:
The larger capital labor ratio means that the country is rich in capital, and it is more capital abundant. Here, the capital labor ration of the US is greater than that of Canada. Thus, the capital-abundant country is the US and labor-abundant country is Canada because of the higher labor capital ratio.
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Chapter 4 Solutions
Pearson eText International Economics -- Access Card
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