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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

The endowment factor is an economic term that establishes the number of factors of production that a given region or institution has. In this case, the endowment factor refers to the amount of labor, land and capital available for the production of a product or service.

In the case of the countries shown above, we can see that Braavos has an advanced urban society, with a large number of industries, which means that Braavos has all the industrial elements necessary to produce its products and this attracts a large labor force, necessary to the work.

On the other hand, Dothrakia has a primitive rural society with very little industrial elements to use in its production, which causes labor to leave the industrial centers and reduces the productive capacity of Dothrakia.

For this reason, we can say that Bravos has abundant labor and capital, while Dothrakia has scarce labor and capital.