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Given the Following Ricardo-Type Table Showing the Amount of Labor

Question 26

Multiple Choice

Given the following Ricardo-type table showing the amount of labor input needed to get one unit of output in each industry in each country:
 Wheat  Chairs Malaysia 3 days 2 days  India  10 days 8 days \begin{array} { l c l } &\underline{ \text { Wheat }} &\underline{ \text { Chairs} } \\\text { Malaysia } & 3 \text { days } & 2 \text { days } \\\text { India } & \text { 10 days } & 8 \text { days }\end{array}


A) Terms of trade of 1 wheat:1.25 chairs is not a feasible equilibrium terms of trade.
B) Terms of trade of 1 wheat:1.5 chairs would give all the gains from trade to India.
C) Malaysia has an absolute advantage in both goods and a comparative advantage in Wheat.
D) India has an absolute advantage in both goods and a comparative advantage in wheat.

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