Gravel Is Made by Hand in Nepal, but by Machine

question 59

Multiple Choice

Gravel is made by hand in Nepal, but by machine in the U.S. because

• A)the marginal product of labor is higher in Nepal than in the U.S.
• B)capital is much more expensive in the U.S.than in Nepal.
• C)of consumer preferences.
• D)the relative prices of labor and capital differ so dramatically in the two countries.

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Definitions:

Machine-Hours

A measure of production output or activity based on the number of hours machines are run, used in allocating machine-related costs to products.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with the level of production output, such as utilities or materials.

Machine-Hours

A measure of production time, representing the number of hours machines are operated in the production process.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with production volume, such as utilities or materials, contrasting with fixed overhead costs.