The HO Model Predicts That the Factor of Production Used

question 13

Multiple Choice

The HO model predicts that the factor of production used
More intensively in the production of exports will
Experience:

• A)decreased demand and a decline in its relative price.
• B)decreased demand and an increase in its relative price.
• C)increased demand and an increase in its relative price.
• D)no change in its demand because the factors of production are fixed in the short run.

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Definitions:

Fixed Budget Variance

The difference between the actual incurred expenses and the expenses budgeted for a set period, under the assumption of fixed operational conditions.

Standard Costing System

An accounting system that assigns fixed costs for materials, labor, and overhead to the production of goods, facilitating budgeting and performance evaluation.

Direct Labour Hours

The total hours worked by employees directly involved in the manufacturing process, contributing to the transformation of raw materials into finished goods.

Unfavourable Variance

A financial term indicating that actual results are worse than expected or budgeted results, leading to a negative impact on profitability.