Suppose That in Slovakia One Unit of Labor Can Produce

question 110

Multiple Choice

Suppose that in Slovakia one unit of labor can produce either 20 tons of wheat or 40 tons of soy and in Poland one unit of labor can produce either 40 tons of wheat or 20 tons of soy. If each country has two units of labor, which of the following consumption combinations can be attained only with trade?

• A) Slovakia consumes 80 tons of soy.
• B) Slovakia consumes 30 tons of both soy and wheat.
• C) Poland consumes 80 tons of wheat.
• D) Poland consumes 40 tons of wheat and 20 tons of soy.

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Definitions:

Direct Labour Cost

The total expense a company incurs for paying the wages of direct labor employees directly involved in producing goods or services.

Overhead Rate

The rate used to allocate manufacturing overhead to individual units of product, typically based on a standard measure such as labor hours or machine hours.

Normal Costing System

An accounting method that assigns indirect costs based on a predetermined rate and direct costs based on actual values.

Actual Overhead Costs

The real expenses incurred for indirect materials, labor, and other costs that are not directly tied to the production of goods or services.