Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R . Assertion A : According to the Heckscher-Ohlin model, free trade results in equalisation of factor prices across nations. Reason R : This is because the model assumes perfect international mobility of the factors of production. In the light of the above statements, choose the correct answer from the options given below:

Question

cdquestions Admin · Accepted Answer

The correct option is(C): A is true but R is false

Answer

Both A and R are true and R is the correct explanation of A

Answer

Both A and R are true but R is NOT the correct explanation of A

Answer

A is true but R is false

Answer

A is false but R is true

List-I (Characteristic)	List-II (Concept)
(A) More debt can be used if debt can be raised at a lower rate	(I) Cost of debt
(B) Since interest is a deductible expense, cost of debt is affected by the tax rate	(II) Risk Consideration
(C) If a firm’s business risk is lower, its capacity to use debt is higher and vice-versa	(III) Tax Rate
(D) A public issue of equity may reduce the management’s holding in the company	(IV) Control

The Correct Option is C

Solution and Explanation

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