Question

The Leontief Paradox found that U.S. exports were more capital-intensive than U.S. import-competing goods directly contradicting the factor-endowment theory.

True

False

Answer 1

The correct answer of above question is: False.

According to factor endownment theory in the context of US economy , this country specialised in exports of those goods which use more capital than Labour and import relatively Labour intensive goods.

But leontief empirically verify the factor endownment theory by testing his hypothesis using input output table for the US for 1947. In this he found that US exported more of labour intensive goods and imported more of capital intensive goods.

Therefore statement must be like 'The Leontief Paradox found that U.S. exports were less capital-intensive than U.S. import-competing goods directly contradicting the factor-endowment theory.'