If the Price of the Capital - Intensive Product Rises

question 18

Multiple Choice

If the price of the capital - intensive product rises more than does the price of the land- intensive product,then

• A)the country that exports the capital- intensive good will lose its comparative advantage.
• B)demand will shift away from the capital- intensive product,and its production will decrease relative to that of the land- intensive product.
• C)demand will shift away from the capital- intensive product,and its production will decrease.
• D)the relative price of the capital- intensive product will fall to some point between the pretrade relative prices.
• E)the production of the capital- intensive product will decrease,but by less than production of the land- intensive product.

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Definitions:

Equity Modes

Various methods or approaches for a company to raise capital through the sale of shares in the business to investors.

Joint Ventures

Business arrangements where two or more parties agree to pool their resources for the purpose of accomplishing a specific task, project, or business activity.

Economic Dissimilarities

The differences in economic conditions, structures, and performance between regions, countries, or groups.

Liability of Foreignness

The inherent disadvantages that foreign firms experience in host countries due to their non-native status, which can include cultural, legal, and economic barriers.