If Hong Kong and Taiwan Had Identical Labor Costs but Were

question 25

Multiple Choice

If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production:

• A) Trade would depend on differences in demand conditions
• B) Trade would depend on economies of large-scale production
• C) Trade would depend on the use of different currencies
• D) There would be no basis for gainful trade

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Definitions:

Alpha

In statistics, alpha represents the level of significance, the probability of rejecting the null hypothesis when it is actually true, commonly set at 0.05 or 5%.

Beta

In statistics, it often refers to the probability of making a Type II error, or in finance, a measure of how much a stock's price could move in relation to the market.

Type II Error

A statistical error that occurs when a false null hypothesis is not rejected, implying that a true effect is missed.

Type I Error

A mistake wherein a true null hypothesis is incorrectly rejected, commonly termed as a "false positive."