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Question: 4 resolution of the leontief paradox the factorendowment theory predicts...

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4. Resolution of the Leontief paradox The factor-endowment theory predicts that because the United States is relatively abundant in capital and relatively scarce in labor, it will export capital-intensive goods, and its import-competing goods will be labor intensive. In the 1950s, Wassily Leontief, a Russian-American economist, tested this proposition by analyzing the capital/labor ratios of export industries and import-competing industries, using U.S. data. He found that the capital/labor ratio for U.S. export industries was lower than that of the United States import-competing industries, which means that U.S. exports were less capital intensive than import-competing goods. These findings appeared to contradict the predictions of the factor-endowment theory and became known as the Leontief paradox Replicate Leontiefs test using the data shown in the following table. Compute the capital/labor ratio for exports and imports, and enter each value in the last column of the table Labor (Person-years) 80 100 Capital/Labor Ratio (Dollars per person-year) Used to Produce $1 Million Worth of... Exports Imports Capital (Dollars) 1,800,000 3,000,000 The numbers in the previous table show that U.S. exports are , and U.S. imports are What do the results of your test illustrate? Check all that apply. The Leontief paradox The Heckschner-Ohlin theoryWhich of the following explanations resolve the Leontief paradox? Check al that apply Leontief did not distinguish between skilled and unskilled labor. Leontief calculated capital/labor ratios for exports and imports, while the Heckscher-Ohlin model compares labor/capital ratios The Heckscher-Ohlin model includes only two goods, while U.S. exports and imports include many goods Leontief wrongly assumed that the United States was abundant in labor.

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