Data from the UK Society of Motor Manufacturers Shows That

question 17

Multiple Choice

Data from the UK Society of Motor Manufacturers shows that, compared to 2013, new car registrations increased 9.3 per cent to 2.4 million units in the UK in 2014. Compared to 2013, the production and export of cars has kept stable in 2014 to 1.50 million units of which 1.2 million units exported. Given this information, which of the following are most likely to be true?

• A) The UK has a comparative advantage in the production of cars.
• B) Domestic production accounts for a large proportion of the supply of cars in the UK.
• C) Out of the cars produced in the UK, 0.3 million cars were sold in the domestic market.
• D) The demand for domestic cars exceeds supply in the UK.

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Definitions:

Labor

The human effort, both physical and mental, used to produce goods and services.

Isocost Line

A chart displaying every possible input mix that can be acquired for an identical expense.

Total Cost

All expenses a business incurs to produce goods or services, including both fixed and variable components.

Price of Capital

The cost of borrowing money to purchase capital assets or the returns expected by investors for providing capital.