Table 1 Endowment of Labor and Capital US 100 20 Canada 10 Workers Machines 1. Based on Table 1, according to the Heckscher-Ohlin Theorem, Canada exports should be goods that A) intensively use labor input. B) intensively use capital input. C) use capital and labor in about equal proportions D) use either labor or capital input, depending on the good. 2. Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource intensive and computers are capital intensive, then according to the Stolper Samuelson Theorem, the incomes of the owners of trade with Brazil begins A) capital B) labor C) natural resources D) It is impossible to determine which will be favored. are likely to rise in Chile after Solution 1) According to Heckscher Ohlin Theorem, A country will export the commodity in which it uses its intensively endowed factor. Since Canada has more machine per worker compared to US. Thus Canada is more capital intensive and will export the good that intensively uses capital input. ans is B. 2) Since Brazil is capital abundant, and computer are capital intensive then Brazil will export computer and Chile will export Timber. Thus income of natural resources are likely to rise in Chile Thus ans is C.