Assume That Two Countries (Home and Foreign) Each Produce Two

question 136

Multiple Choice

Assume that two countries (Home and Foreign) each produce two goods
(corn and wheat) under constant cost production.Home produces 0.5
Ton of corn or a ton of wheat with a day of labor.Without trade (in
Autarky) , Home's daily production is 20 tons of wheat and 10 tons of
Corn.Now suppose that Home has the opportunity to trade with Foreign
At an international price of corn equal to a ton of wheat per ton of corn.
In which product will Home find its comparative advantage?

• A)wheat
• B)corn
• C)Home will find its competitive advantage in neither corn nor wheat.
• D)Home will find its competitive advantage in both corn and wheat.

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Definitions:

Variances

Differences between planned or standard costs and actual costs, analyzed to understand and manage costs within financial planning.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (or standard) cost of those materials.

Variable Overhead

Costs that vary with production volume but are not directly tied to specific production units, such as utilities for the manufacturing plant.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process or providing a service, used in costing and operational efficiency analyses.