Suppose That Home Has 10% of the World's Capital, 10

question 50

Essay

Suppose that Home has 10% of the world's capital, 10% of the world's skilled labor, 40% of the world's unskilled labor, and produces 20% of the world's GDP. What does this information suggest about Home's resource endowments? Explain your answer.

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Definitions:

Unit Variable Costs

The costs that vary directly with the level of production or sales volume, such as materials and labor, calculated on a per-unit basis.

Break-even Sales

The amount of revenue from sales needed to cover all of a company’s operating expenses, resulting in neither profit nor loss.

Unit Variable Costs

The costs that vary directly with the production volume, including materials and labor, on a per unit basis.

Break-even Point

The point at which total revenues equal total costs, resulting in no profit or loss.