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

question 31

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. The relationships shown in here indicate that the United States has a comparative advantage in the production of _____ while the Rest of the World has a comparative advantage in the production of _____.

• A)both the goods; neither shoes nor automobiles
• B)shoes; automobiles
• C)automobiles; shoes
• D)neither shoes nor automobiles; both of the goods

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Definitions:

War On Terrorism

Global crusade to root out anti-American, anti-Western Islamist terrorist cells; launched by President George W. Bush as a response to the 9/11 attacks.

Religious War

A conflict primarily caused or justified by differences in religion.

Quasi-Sovereignty

A state of limited or partial sovereignty, where a territory or region possesses some, but not all, attributes of full sovereignty.

Casinos

Public places or establishments where gambling games are played, often part of larger hospitality and entertainment complexes.