Consider Two Products, Automobiles and Shoes.If Shoes Are

question 10

Multiple Choice

Consider two products, automobiles and shoes.If shoes are
Labor intensive and automobiles are capital intensive, what
Can we expect in free­trade conditions?

• A)The relative price of automobiles in the auto­exporting country will decrease.
• B)The relative price of shoes in the shoe­exporting country will increase.
• C)The capital­abundant country will produce more shoes.
• D)The labor­abundant country will produce more automobiles.

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Definitions:

Mortgage-Backed Securities

Financial instruments that are secured by mortgages, with payments derived from the underlying loans.

Economic Efficiency

The optimal allocation of resources to maximize the production of goods and services without wasting any resources.

Competitive Forces

Pressures or influences that affect an organization's ability to compete in a market, including rivalry among existing competitors, the threat of new entrants, and bargaining power of customers and suppliers.

Market Allocation

A method of distributing goods and services among buyers and sellers wherein prices are determined by supply and demand forces in the market.