The Table Given Below Shows the Units of Land and Labor

question 2

Multiple Choice

The table given below shows the units of land and labor required to produce a unit of bread and cheese respectively in country X. If country X is a relatively land-abundant country, the opening up of free trade would cause the price of bread relative to cheese to: $$\begin{array} { | c | c | c | } \hline & \text { 1 urit of Bread } & \text { 1 unit of Cheese } \\\hline \text { Labor Input } & 5 \text { units } & 20 \text { units } \\\hline \text { Land Input } & 4 \text { units } & 10 \text { units } \\\hline\end{array}$$

• A)rise.
• B)fall.
• C)stay the same.
• D)initially rise but fall afterward.

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Definitions:

Business Combination Valuation Reserve

A reserve account used in accounting for the difference between the fair value of net assets of the acquired business and the purchase price.

Company Tax Rate

The percentage of its profits a corporation is required to pay as tax to the government.

Pre-acquisition Equity

The portion of equity interest in an acquiree that the acquirer held before obtaining control of the acquiree.

Fair Value Adjustments

Adjustments made to the reported value of an asset or liability to reflect its current market value rather than its book value.