If Demand Reversal Is the Explanation for the Leontief Paradox

question 8

Multiple Choice

If demand reversal is the explanation for the Leontief paradox, this would imply that the demand by the United States for labor-intensive goods is relatively __________ and therefore that U.S. wages would be relatively __________ in comparison to wages in U.S. trading partners.

• A) low; low
• B) low; high
• C) high; low
• D) high; high

---

Definitions:

Subjective Approach

A perspective or method based on personal opinions, interpretations, points of view, emotions, and judgment.

Weighted Average Cost

A method to calculate the average cost of goods produced or acquired, weighted by the quantities.

SML Approach

A representation of the Capital Asset Pricing Model (CAPM) that displays the expected return of a security as a function of its systemic risk.

Debt-To-Assets Ratio

A financial metric indicating the proportion of a company's assets that are financed by debt, used to assess the company's leverage and financial stability.