Assume a two-country, two-good, two-input model where the following relationships hold:(K/L)U.S. > (K/L)ROW(K/L)automobiles > (K/L)shoes (K/L)U.S. is the capital-labor ratio in the United States, (K/L)ROW is the capital-labor ratio in the Rest of the World, (K/L)automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L)shoes indicates the capital-labor ratio in the production of shoes.Assume further that technology and tastes are the same in the United States and the Rest of the World. The relationships shown here indicate that, with no trade, in the United States
A. the relative labor endowment is higher than in the Rest of the World.
B. the price of shoes relative to automobiles is lower than in the Rest of the World.
C. the relative capital endowment is the same as in the Rest of the World.
D. the price of automobiles relative to shoes is lower than in the Rest of the World.
Answer: D
You might also like to view...
Other things being equal, a fall in the price of orange juice will decrease the quantity supplied
a. True b. False Indicate whether the statement is true or false
Suppose that the labor market for high school chemistry teachers is initially in equilibrium. Chemistry teachers use laboratory chemicals as an important part of their jobs. New environmental regulations ban the use of many chemicals, which means that fewer laboratory chemicals are available for high school chemistry teachers to use in their jobs. In the market for high school chemistry teachers,
the equilibrium wage a. increases because the marginal productivity of high school chemistry teachers increases. b. decreases because the marginal productivity of high school chemistry teachers decreases. c. increases because the supply of high school chemistry teachers increases. d. decreases because the supply of high school chemistry teachers decreases.
If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip?
a. a decrease in the price of Miracle Whip
b. an increase in the price of mayonnaise
c. a decrease in the price of mayonnaise
d. Both a and b are correct
From society's standpoint, positional arms races lead to outcomes that are ________.
A. efficient B. inefficient C. dominant D. desirable