In the Heckscher-Ohlin Model,when There Is International-Trade Equilibrium

question 5

Multiple Choice

In the Heckscher-Ohlin model,when there is international-trade equilibrium

• A) the relative price of the capital intensive good in the capital rich country will be the same as that in the capital poor country.
• B) the capital rich country will charge less for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.
• C) the capital rich country will charge more for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.
• D) workers in the capital rich country will earn more than those in the poor country.
• E) the workers in the capital rich country will earn less than those in the poor country.

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Definitions:

Variable Manufacturing Overhead

Costs of production that fluctuate with the level of output, such as materials and operational expenses, excluding direct labor and material costs.

Unit Product Cost

The overall expense of manufacturing a single product unit, encompassing direct materials, direct labor, and production overhead costs.

Unit Product Cost

The total cost (direct materials, direct labor, and manufacturing overhead) divided by the number of units produced.

Machine-Hours

Machine-hours represent a measure of production time, indicating the total hours a machine is operated in the manufacturing process of goods.