Q2. Distinguish among land-, labor-,... [FREE SOLUTION]

Chapter 20: Q2. (page 430)

Distinguish among land-, labor-, and capital-intensive goods, citing an example of each without resorting to book examples. How do these distinctions relate to international trade? How do distinctive products, unrelated to resource intensity, relate to international trade?

Short Answer

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The land-, labor-, and capital-intensive goods are those in whichthe land, labor, and capital usage are more, respectively.

For example, corn is a land-intensive good, furniture is a labor-intensive good, and oil production is a capital-intensive good.

The good intensive in the factor that is abundant is exported.

The 鈥榖rand label鈥� provides a product with an advantage in international trade.

Step by step solution

Step 1. Difference between land-, labor-, and capital-intensive goods

Land-intensive goods are those goods in which land requirement as input is high; for example, the production of corn requires more land.

Labor-intensive goods need more labor skills; for example, furniture production requires manual labor to provide details and craft.

Capital-intensive goods use more capital to be produced than other factors; for example, oil production requires huge machinery to extract the oil.

Step 2. 91影视 related to international trade

The abundant supply of resources in the nation will lead to lower costs; thus, having a comparative cost advantage over the other nations. For example, if a country has a lower cost of labor, then it can produce more labor-intensive goods and trade globally. If the country does not have abundant but scarce resources, then the cost will be huge.

The difference in cost leads to specialization and open international trade as the cost difference is the basis for international trade.

Step 3. Distinctive product

The distinctive products are those products that do not have any cost advantage but have high demand in the international market because of the brand that signifies the quality of the product and also relate to the standard of living. For example, a famous product for its quality will have high demand globally even though the exporting nation does not have any cost advantage. The 鈥榣abel鈥� on the product will lead the consumers to pay more than the available substitutes.