If Labor Productivities Were Exactly Proportional to Wage Levels Internationally

question 35

Multiple Choice

If labor productivities were exactly proportional to wage levels internationally, this would

• A) not negate the logical basis for trade in the Ricardian model.
• B) render the Ricardian model theoretically correct but practically useless.
• C) negate the logical basis for trade in the Ricardian model.
• D) negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners.
• E) demonstrate the validity of the Ricardian model.

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Definitions:

Net Book Value

The value of an asset after subtracting accumulated depreciation or amortization from its original cost.

TSX

The Toronto Stock Exchange, a major stock exchange in Canada where shares of public companies are traded.

Outstanding Shares

The total number of shares of a corporation that are currently owned by investors, including restricted shares owned by the company's officers and insiders.

Fair Value

An estimate of the market price of an asset or liability, based on the current market conditions and the asset's characteristics.