The Following Input-Requirements Data Are for Country A, a Capital-Abundant

question 17

Multiple Choice

The following input-requirements data are for country A, a capital-abundant country where they produce nothing but bread and wine using only capital and labor as inputs. $$\begin{array} { | c | c | c | } \hline & 1 \text { pound of bread } & \text { 1 gallon of wine } \\\hline \text { Capital input } & 5 \text { units } & 20 \text { units } \\\hline \text { Labor input } & 4 \text { units } & 10 \text { units } \\\hline\end{array}$$ In the long run, which of the following can most reasonably be inferred after this country engages in free trade?

• A)The wage rates will decline but the returns to capital will increase.
• B)The returns to capital will decline but the wage rates will increase.
• C)The wage rates will decline in the wine industry and will increase in the bread industry.
• D)The returns to capital will fall in the wine industry and will rise in the bread industry.

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Definitions:

Total Income

The sum of all wages, salaries, profits, interest payments, rents, and other forms of earnings received by a country or individual in a defined time period.

1968

An iconic year characterized by global events and movements, including protests against the Vietnam War, civil rights demonstrations, and cultural shifts.

Long-Term Poverty

A condition where an individual or community experiences sustained periods of low income and living standards over many years.

Black Families

Refers to family units or households identified or classified as Black or African American, often studied in socio-economic and cultural contexts.