If a Commodity Is Classified as "Labor-Intensive" at One Set

question 15

Multiple Choice

If a commodity is classified as "labor-intensive" at one set of relative factor prices but "capital-intensive" at another set of relative factor prices, this situation is known as

• A) demand reversal.
• B) factor-intensity reversal.
• C) balance-of-payments reversal.
• D) factor price reversal.

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Definitions:

Effective-Interest Method

A way of calculating the amortized cost of a bond and of allocating interest expense over the bond's life, reflecting the actual interest rate earned.

Discount on Bonds Payable

The difference between the face value of a bond and its selling price, when sold for less than its face value.

Amortization

The process of spreading out a loan or intangible asset cost over a specific period of time for accounting and taxation purposes.