Given the Following Ricardo-Type Table Showing the Amount of Labor

question 26

Multiple Choice

Given the following Ricardo-type table showing the amount of labor input needed to get one unit of output in each industry in each country:
$$\begin{array} { l c l } &\underline{ \text { Wheat }} &\underline{ \text { Chairs} } \\\text { Malaysia } & 3 \text { days } & 2 \text { days } \\\text { India } & \text { 10 days } & 8 \text { days }\end{array}$$

• A) Terms of trade of 1 wheat:1.25 chairs is not a feasible equilibrium terms of trade.
• B) Terms of trade of 1 wheat:1.5 chairs would give all the gains from trade to India.
• C) Malaysia has an absolute advantage in both goods and a comparative advantage in Wheat.
• D) India has an absolute advantage in both goods and a comparative advantage in wheat.

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Definitions:

Insect

A small arthropod animal that has six legs and, generally, one or two pairs of wings.

Crystallin Protein

Specialized proteins found in the eye lens, responsible for maintaining its transparency and focusing ability.

Cornea

Clear, protective covering at the front of a vertebrate eye; helps focus light on the retina.