Question: Spain and Italy only trade with each other. Each produces olive and cheese. The production of olive is relatively labor-intensive, and the production of cheese

Spain and Italy only trade with each other. Each produces olive and cheese. The production of olive is relatively labor-intensive, and the production of cheese is relatively capital-intensive.

Spain has 23 million labor and €8.5bn capital while Italy has €160bn capital and 24 million labor.

According to the Heckscher–Ohlin model, what product(s) will Spain export?

	a.	neither olive nor cheese
	b.	cheese
	c.	both olive and cheese
	d.	olive

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