Consider Two Products: Automobiles and Shoes

question 138

Multiple Choice

Consider two products: automobiles and shoes. If shoes are labor intensive and automobiles are capital intensive, what can we expect in free-trade conditions?

• A) The relative price of automobiles in the auto-exporting country will decrease.
• B) The relative price of shoes in the shoe-exporting country will increase.
• C) The capital-abundant country will produce more shoes.
• D) The labor-abundant country will produce more automobiles.

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Definitions:

Abruptly

Suddenly and unexpectedly, often in a way that seems rude or unanticipated.

Yawning

An involuntary action involving opening the mouth widely and inhaling deeply, often in response to tiredness or boredom.

Deep Prolonged Breath

A type of breathing technique where one inhales deeply and slowly, filling the lungs fully, followed by a slow, complete exhalation.

Lungs

The primary organs of the respiratory system, responsible for gas exchange between the air and the bloodstream.