in international trade, Canada produces airplanes, which require labour and capital to produce, and beef, which requires labour and land to produce. Canada exports planes. If the world price of plane increases then Group of answer choices Capital to labour ratio in plane industry will not change Capital to labour ratio in plane industry will increase Canada will completely specialize in plane production Capital to labour ratio in plane industry will decrease
Question
in international trade, Canada produces airplanes, which require labour and capital to produce, and beef, which requires labour and land to produce. Canada exports planes.
If the world price of plane increases then
Group of answer choices
Capital to labour ratio in plane industry will not change
Capital to labour ratio in plane industry will increase
Canada will completely specialize in plane production
Capital to labour ratio in plane industry will decrease
Solution
The correct answer is "Capital to labour ratio in plane industry will increase."
Here's why:
If the world price of planes increases, it means that the demand for planes has increased. To meet this increased demand, Canada would need to produce more planes. Since planes require both labour and capital to produce, Canada would need to increase the use of both these inputs. However, since planes are capital-intensive, the increase in the use of capital would be greater than the increase in the use of labour. This would result in an increase in the capital to labour ratio in the plane industry.
The other options are not correct because:
- The capital to labour ratio in the plane industry would not remain the same. It would increase due to the reasons explained above.
- Canada would not necessarily completely specialize in plane production. While the increase in the world price of planes would make plane production more profitable, Canada would still need to consider the costs and benefits of producing other goods, including beef.
- The capital to labour ratio in the plane industry would not decrease. It would increase due to the reasons explained above.
Similar Questions
Canada produces airplanes, which require labor and capital to produce, and beef, which requires labor and land to produce. Canada exports planes. If the productivity of Canadian capital increases while the productivity of Canadian land decreases, Group of answer choicesworkers are better offoutput of beef industry decreasesthe labour to capital ratio in the plane industry decreasesworkers are worse off
Brazil produces aeroplanes, which require labor and capital to produce, and beef, which requires labor and land to produce. Brazil exports beef. If the world price of beef decreases then Group of answer choices Brazil will completely specialize in beef production Land to labor ratio in beef industry will increase Capital to labor ratio in aeroplanes industry will not change Capital to labor ratio in aeroplanes industry will increase
In the past, Canada manufactured clothes. Many clothing corporations have shut down their Canadian factories and relocated to China. This is an example of __________.Question 17Select one:a.Conflict theoryb.OECDc.Global inequalityd.Capital flight
As the quantity produced increasesthe cost of per unit production decreases.Select one:a.Product Differentiationb.Capital Requirementsc.Government Regulationsd.Economies of Scale
Consider the case of multinational production where Romania is specializing in the production of components and France is specializing in R&D. An increase in the world price of components will Group of answer choices benefit French consumers decrease the output of French firms increase unemployment in Romania increase the output of French firms
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.