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:

Sequential Game

A game theory model where players make decisions one after another, with later players having knowledge of the actions taken by those who preceded them.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, given the strategies of other players, and no player has anything to gain by changing only their own strategy unilaterally.

Payoff Matrix

A table that shows the potential outcomes of various strategies in a decision-making scenario, often used in game theory.

Sequential Game

A game in game theory where players make decisions or moves one after another, with later players having some knowledge of previous actions.