The first three questions are based on the following information: 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 5 clothing 4 1. 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 2. 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. 3. 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. 58 8

The first three questions are based on the following information: 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 5 clothing 4 1. 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 2. 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. 3. 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. 58 8

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Description: The first three questions are based on the following information:Assume two nations: Vietnam and US, and two commodities: clothing andwheat. There is only one factor of production: labour. The following tablepresents the number of hours it takes to

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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