Suppose that 2 hours labor and 2 units capital are required to produce 1 yard of cloth in Australia, while 1 hour labor and 3 units capital required to produce 1 pound of food in Australia. Australia has a total of 2,000 labor and 3,000 capital.

Suppose that the United States (a foreign country that trades with Australia) has a total of 4,000 labor and 2,000 capital. Which country is relatively labor abundant? Why?