Assume a Two-Country Two-Good Two-Input Model Where the Following Relationships

Multiple Choice

Assume a two-country two-good two-input model where the following relationships hold: (K/L) _U.S. > (K/L) _ROW
(K/L) _automobiles > (K/L) _shoes
Where (K/L) _U.S. is the capital-labor ratio in the United States, (K/L) _ROW is the capital-labor ratio in the Rest of the World, (K/L) _automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L) _shoes indicates the capital-labor ratio in the production of shoes. Assume further that technology and tastes are the same in the United States and the Rest of the World. The relationships shown here indicate that, with no trade, in the United States:

A) the relative labor endowment is higher than in the Rest of the World.
B) the price of automobiles relative to shoes is lower than in the Rest of the World.
C) the price of shoes relative to automobiles is lower than in the Rest of the World.
D) the relative capital endowment is the same as in the Rest of the World.