Assume the Standard Trade Model with Two Countries (Alpha and Beta)

question 16

Multiple Choice

Assume the standard trade model with two countries (Alpha and Beta) , two goods (food and drink) , and two factors of production (land and labor) . Further assume that Alpha is relatively labor-abundant and drink is relatively labor-intensive. According to the Heckscher-Ohlin theory, Beta has a comparative advantage in the production of:

• A)drink.
• B)food.
• C)both goods.
• D)neither good.

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Definitions:

Department Manager

A professional responsible for overseeing the operations, staff, and budget of a department within an organization.

Investment Center

A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the fixed assets available to the center.

Authority

The power or right to make decisions, direct others, and enforce obedience within a particular scope.

Plant Assets

Fixed assets that are tangible in nature, such as buildings and machinery, used in the operations of a business and expected to be useful for many years.