Economics · International Trade Theories
If a country experiences an increase in its capital endowment while holding commodity prices constant, the Rybczynski theorem predicts that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The output of both goods increases proportionately
- 2The output of the capital-intensive good increases and the output of the labor-intensive good decreases✓
- 3The output of the labor-intensive good increases and the output of the capital-intensive good decreases
- 4The trade pattern remains completely unchanged
Correct answer
The output of the capital-intensive good increases and the output of the labor-intensive good decreases
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