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

question 49

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. According to H-O theory, country A has a comparative advantage in the production of: $$\begin{array} { | c | c | c | } \hline & 1 \text { pound of bread } & \text { 1 gallon of wine } \\\hline \text { Capital input } & 5 \text { units } & 20 \text { units } \\\hline \text { Labor input } & 4 \text { units } & 10 \text { units } \\\hline\end{array}$$

• A)both bread and wine.
• B)neither bread nor wine.
• C)wine.
• D)bread.

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Definitions:

Deposit

A sum of money placed or kept in a bank account, usually to gain interest.

Future Value

The amount of money an investment is expected to grow to over a period at a specified rate of interest or return.

Interest Factors

Mathematical factors used to calculate the future or present value of cash flows based on an interest rate.