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:

Interested Parties

Individuals or groups that have a stake or interest in the outcome of a project, decision, or endeavor.

Benefit

An advantage, improvement, or gain received from a product or service, often considered in decision-making or evaluations of welfare.

Cost

An amount that must be paid or spent to buy or obtain something, covering the consumption of resources such as time, labor, and materials.

Deal

A contractual agreement between two or more parties for the purpose of buying, selling, or exchange of goods, services, or any transaction leading to mutual benefits.