Given the Following Ricardo-Type Table Shows the Labor Input Required

question 11

Multiple Choice

Given the following Ricardo-type table shows the labor input required per unit of output in each of the two industries in each of the two countries:
$$\begin{array} { l l l } & \underline{ { \text { SteelCloth }} } \\& & \\\text { United Kingdom } & \text { 4 days } & 8 \text { days } \\\text { Germany } & \text { 6 days } & 9 \text { days }\end{array}$$
Which one of the following statements is true?

• A) The United Kingdom has an absolute advantage in both goods and a comparative Advantage in cloth.
• B) The pretrade price ratio in the United Kingdom is 1 steel:2 cloth.
• C) The United Kingdom has an absolute advantage in neither good but a comparative Advantage in steel.
• D) The pretrade price ratio in Germany is 1 cloth:1.5 steel.

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Definitions:

Selling Price

The amount of money a customer pays to buy a product or service, determined by various factors including cost, market demand, and competition.

Unit Product Costs

The combined expenses of direct materials, direct labor, and manufacturing overhead incurred in the production of a single product unit.

Job M598

A specific reference to an individual job or project within a job costing system, indicating a unique piece of work for tracking costs.

Overhead Applied

The process of assigning or allocating overhead costs to products or cost objects based on a predetermined overhead rate.