Assume two nations: Vietnam and US, and two commodities: clothing and wheat. There is only one factor of production: labour. The following table presents the number of hours it takes to produced one unit of the good in each nation: Vietnam US Wheat 6 hours 5 hours Clothing 4 hours 8 hours The relative price of clothing in the US is a) 5/8 kg of wheat b) 8/5 yards of clothing c) 8/5 kg of wheat d) 5/8 yards of clothing If US and Vietnam were to trade, the relative price of wheat a) Can be 2 yards of clothing b) Must be between 5/8 and 1.5 yards of clothing c) Must be between 2/3 and 1.6 yards of clothing d) Can be ½ yards of clothing. According to labour theory of value, a) US will have absolute advantage in the production of clothing and wheat. b) Vietnam will have comparative and absolute advantage in the production of clothing. c) Vietnam will have comparative advantage in the production of wheat. d) US will have comparative advantage in the production of clothing.
Assume two nations: Vietnam and US, and two commodities: clothing and
wheat. There is only one factor of production: labour. The following table
presents the number of hours it takes to produced one unit of the good in
each nation:
| Vietnam | US | |
| Wheat | 6 hours | 5 hours |
| Clothing | 4 hours | 8 hours |
The relative price of clothing in the US is
a) 5/8 kg of wheat
b) 8/5 yards of clothing
c) 8/5 kg of wheat
d) 5/8 yards of clothing
If US and Vietnam were to trade, the relative price of wheat
a) Can be 2 yards of clothing
b) Must be between 5/8 and 1.5 yards of clothing
c) Must be between 2/3 and 1.6 yards of clothing
d) Can be ½ yards of clothing.
According to labour theory of value,
a) US will have absolute advantage in the production of clothing and
wheat.
b) Vietnam will have comparative and absolute advantage in the
production of clothing.
c) Vietnam will have comparative advantage in the production of wheat.
d) US will have comparative advantage in the production of clothing.
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