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 | | First, a country is relatively capital abundant if the ratio of its capital stock, K, to its labor supply, L, exceeds the capital to labor ratio in another country. |
 | | If a country, say the US, is relatively capital abundant compared to another country, say Canada, then the US will have a lower opportunity cost in autarky for the relatively capital intensive good (say X) and Canada will have a lower opportunity cost in autarky for the relatively labor intensive good (say Y). |
 | | That is, a country with much capital compared to labor will have a comparative advantage in capital intensive goods, and a country with much labor compared to capital will have a comparative advantage in labor intensive goods. |
| www.swlearning.com /economics/macro/miller_macro3e/sg_ch03.doc (576 words) |
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