Scenario: Red Country and Purple Country Have Identical Aggregate Production

question 33

Multiple Choice

Scenario: Red Country and Purple Country have identical aggregate production functions. The amount of physical capital stock available to each country is equal. Labor supply in Red Country is HR, while the labor supply in Purple Country is HP.

-Refer to the scenario above.Relative to Purple Country's total efficiency units of labor,in Red Country,________.

• A) the labor force must be bigger
• B) technology must be better
• C) the average human capital of workers must be smaller
• D) marginal contributions of total efficiency units of labor must be smaller

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Definitions:

Direct Labor Budget

An estimation of the total cost of labor directly involved in the production process for a future period.

Merchandise Purchases Budget

A merchandise purchases budget outlines the planned spending on goods for resale during a certain period, considering expected sales and inventory requirements.

Credit Sales

Sales made on credit, allowing customers to pay at a later date, which are recorded as accounts receivable on the balance sheet.

Cash Receipts

The collection of cash during a period, including cash sales and received payments from customers.