The following input-requirements data are for country A, a capital-abundant country where they produce nothing but bread and wine using only capital and labor as inputs. Based on this information, which of the following statements is true? $$\begin{array} { | c | c | c | }
\hline & 1 \text { pound of bread } & \text { 1 gallon of wine } \
\hline \text { Capital input } & 5 \text { units } & 20 \text { units } \
\hline \text { Labor input } & 4 \text { units } & 10 \text { units } \
\hline
\end{array}$$
A)The inputs are used in the same proportion in the production of both the goods.
B)Bread is a relatively capital-intensive good.
C)Wine is a relatively capital-intensive good.
D)In the absence of trade, the wage rate is lower than the rental rate of capital in this country.

Question

The following input-requirements data are for country A, a capital-abundant country where they produce nothing but bread and wine using only capital and labor as inputs. Based on this information, which of the following statements is true? $$\begin{array} { | c | c | c | } 
\hline & 1 \text { pound of bread } & \text { 1 gallon of wine } \
\hline \text { Capital input } & 5 \text { units } & 20 \text { units } \
\hline \text { Labor input } & 4 \text { units } & 10 \text { units } \
\hline
\end{array}$$
A)The inputs are used in the same proportion in the production of both the goods.
B)Bread is a relatively capital-intensive good.
C)Wine is a relatively capital-intensive good.
D)In the absence of trade, the wage rate is lower than the rental rate of capital in this country.

Quizplus · Accepted Answer

Wine requires more capital units relative to labor units (20:10) compared to bread (5:4), making wine the relatively capital-intensive good.

The Following Input-Requirements Data Are for Country A, a Capital-Abundant