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Social Studies, 28.10.2020 20:50 chrisdelreal86
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Dothrakia and Braavos
There are two countries on a continent, Dothrakia and Braavos. The only products these countries produce are boots and shirts. Consider only two factors of production: labor and capital. Compared to boots, shirts are capital intensive (they require looms to make the cloth, whereas boots are made from leather that can be dried in the sun). Dothrakia is a primitive, rural society where only a few families have a loom. Braavos is an advanced, urban society with many factories and the continent’s only bank. The two countries have similar size populations.
1. Based on this description, what do you think are the relative factor endowments?
a. Dothrakia is labor and capital abundant; Braavos is labor and capital scarce
b. Braavos is labor and capital abundant; Dothrakia is labor and capital scarce
c. Dothrakia is labor abundant and capital scarce; Braavos is capital abundant and labor scarce
d. Dothrakia is capital abundant and labor scarce; Braavos is labor abundant and capital scarce
e. Braavos and Dothrakia are both labor abundant and capital scarce
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Dothrakia and Braavos
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