You Are Given the Following Classical-Type Table Indicating the Number

question 3

Multiple Choice

You are given the following Classical-type table indicating the number of days of labor input needed to make one unit of output of each of the five commodities in each of the Two countries. Assume that the wage rate in England is £20 per day, that the wage rate in Portugal is 40 euros per day, and that the fixed exchange rate is £1 = 3 euros.
$\begin{array}{llllll}&\text { Good A } &\text { Good B } & \text { Good C }& \text { Good D } &\text { Good E }\\\hline\text { England } & 1 \text { day } & 5 \text { days } & 2 \text { days } & 1 \text { day } & 4 \text { days } \\\text { Portugal } & 4 \text { days } & 4 \text { days } & 1 \text { day } & 2 \text { days } & 5 \text { days }\end{array}$

With the given information, what will be the trade pattern if the two countries engage in Trade?

• A) England will export good A and import goods B, C, D, and E.
• B) England will export goods A and D and import goods B, C, and E.
• C) England will export goods A, B, and E and import goods C and D.
• D) England will export goods A, B, D, and E and import good C.

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Definitions:

Slope

The measure of the steepness or incline of a line, defined as the ratio of the change in the y-variable to the change in the x-variable.

Mean Value

The average of a set of numerical data, calculated by dividing the sum of all values by the number of values.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter.

Independent Variable

In statistical analysis, a variable that is manipulated to observe its effect on another variable, often called the dependent variable.