Assume the Standard Trade Model with Two Countries (Alpha and Beta)

question 28

Multiple Choice

Assume the standard trade model with two countries (Alpha and Beta) , two goods (food and drink) , and two factors of production (land and labor) . Further assume that Alpha is relatively labor-abundant and drink is relatively labor-intensive. According to the Heckscher-Ohlin theory, Alpha has a comparative advantage in the production of:

• A)drink.
• B)food.
• C)both goods.
• D)neither good.

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