Even If We Relax the Assumptions of the Simple Ricardian

question 34

Multiple Choice

Even if we relax the assumptions of the simple Ricardian model that there are constant returns to scale and realistically assume diminishing returns to specialization,it can still be concluded that:

• A)the benefits of unrestricted trade do not hold.
• B)free trade is beneficial but the gains may not be as great as in a constant returns case.
• C)governments should intervene in the market to bring about a zero-sum game.
• D)the benefits of free trade are comparatively much less than government-regulated trade.

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Definitions:

Budget Variance

The difference between the budgeted amount of expense or revenue, and the actual amount of expense or revenue incurred.

Volume Variance

The difference between the budgeted fixed overhead and the applied fixed overhead, which is usually driven by a difference in actual production volume and the expected production volume.

Materials Price Variance

The variance between the real expense of materials and their anticipated (standard) price.

Raw Material

The basic substances or components that are processed or used in the manufacturing of goods.