Suppose Australia, a Land (K)-Abundant Country, and Sri Lanka, a Labor(L)-Abundant

question 66

Essay

Suppose Australia, a land (K)-abundant country, and Sri Lanka, a labor(L)-abundant country, both produce labor and land intensive goods with the same technology.

-Refer to above figure. Imagine that the relative capital abundance of Australia was so much greater than that of Sri Lanka, that we would have to locate Australia far to the right on the K/L axis. If this were so far to the right that there was no area of overlap on the w/r axis, then what product would Australia export?
Which product will each of the trade partners export?
Will the relative wages as calculated now be the same or different in both Australia and Sri Lanka?

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Definitions:

William McKinley

The 25th President of the United States, serving from 1897 until his assassination in 1901, noted for leading the nation during the Spanish-American War and promoting economic growth.

Cuban Uprising

Refers to any of the various rebellions or revolutions in Cuba, most notably the Cuban Revolution of 1959 which brought Fidel Castro to power.

USS Maine

An American naval ship whose explosion in Havana Harbor in 1898 led to the Spanish-American War, sparking a significant escalation in U.S. military involvement overseas.

President McKinley

The 25th President of the United States, William McKinley, served from 1897 until his assassination in 1901, and was known for leading the nation during the Spanish-American War.