In the Specific Factors Model,an Increase in the World Price

question 22

Multiple Choice

In the specific factors model,an increase in the world price of food will lead to:

• A) an increase in the real earnings of land.
• B) a decrease in the real earnings of land.
• C) no change in the real earnings of land.
• D) a decrease in the nominal wage in the food sector.

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Definitions:

Direct Labor Hour

A unit of measure for the amount of time a worker spends on a specific task or project.

Factory Overhead

all indirect costs associated with the manufacturing process, excluding direct labor and direct materials.

Machine Hours

A measure of production time or activity based on the number of hours machines are used in the manufacturing process.

Overapplied Overhead

A situation where the actual manufacturing overhead costs are less than the overhead costs applied to production, resulting in a variance.