Assume a Two-Country Two-Good Two-Input Model Where the Following Relationships

question 18

Multiple Choice

Assume a two-country two-good two-input model where the following relationships hold: (K/L) _U.S. > (K/L) _ROW
(K/L) _automobiles > (K/L) _shoes
Where (K/L) _U.S. is the capital-labor ratio in the United States, (K/L) _ROW is the capital-labor ratio in the Rest of the World, (K/L) _automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L) _shoes indicates the capital-labor ratio in the production of shoes. Assume further that technology and tastes are the same in the United States and the Rest of the World. If trade opens up between the United States and the Rest of the World, according to the Heckscher-Ohlin model, the United States will export _____ and import _____.

• A)both the goods; neither good
• B)shoes; automobiles
• C)automobiles; shoes
• D)neither good; both of the goods

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Definitions:

Quality Control

A process through which a business seeks to ensure that product quality is maintained or improved and manufacturing errors are reduced or eliminated.

Visual Inspection

The process of examining objects, components, or materials for defects using human sight, sometimes assisted by optical instruments.

Mass Production

A manufacturing process characterized by the high volume production of standardized goods using assembly line techniques.

Physical Variables

Quantifiable aspects that can affect the outcome of experiments or operations in the physical world, such as temperature or pressure.