Homework Answers
a) The capital-labor ratio for the United States = 40/200 = 1/5
and for Canada = 10/60 = 1/6.
Since 1/5 is greater than 1/6, the U.S. is capital abundant.
It means the labor-capital ratio is higher in Canada, so it is labor abundant.
b) The capital-labor ratio to make steel is 1/4;
and to make bread it is 1/8.
Hence, steel is more capital intensive and bread is more labor intensive.
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