Exam 3: Labor Productivity and Comparative Advantage: the Ricardian Model

How does the two-good,two-country version of the Ricardian model differ from the two-country,many-good model in terms of the determination which goods are produced and exported by each country?

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Question 1

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In the two-good-two-country version of the Ricardian model,comparative advantage is totally determined by physical productivity ratios.Changes in wage rates in either country do not change physically determined comparative advantages,and therefore cannot affect which product will be exported by which country.
However,when there are more than two goods in the two-country model,changes in wage rates in one or the other country can in fact determine which good or goods each of the countries will export.The physical productivity definition of comparative advantage employed in the two-good model becomes ambiguous.Instead,changes in relative wage rates will alter international competitiveness along the "chain of comparative advantage."

-Given the information in the table above,Home's opportunity cost of widgets is

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Question 2

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A nation engaging in trade according to the Ricardian model will find its consumption bundle

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Question 3

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-Given the information in the table above.What is the opportunity cost of cloth in terms of Widgets in Foreign?

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Question 4

-Given the information in the table above,if it is ascertained that Foreign uses prison-slave labor to produce its exports,then home should

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Question 5

-Given the information in the table above,Home's opportunity cost of cloth is

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Question 6

-Given the information in the table above,if the world equilibrium price of widgets were 40 cloths,then

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Question 7

-Given the information in the table above.What is the opportunity cost of Cloth in terms of Widgets in Foreign?

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Question 8

If a production possibilities frontier is a straight line,then production occurs under conditions of

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Question 9

The earliest statement of the principle of comparative advantage is associated with

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Question 10

Use the information in the table below to answer the following questions. (a)Does either country have an absolute advantage in the production of wheat or beef? Explain. (b)What is the opportunity cost of wheat in each country? (c)What is the opportunity cost of beef in each country? (d)Analyze comparative advantage and opportunities for trade between the U.S.and Argentina.

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Question 11

Which of the following statements is TRUE?

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Question 12

In 1975,wage levels in South Korea were roughly 5% of those in the United States.It is obvious that if the United States had allowed Korean goods to be freely imported into the United States at that time,this would have caused devastation to the standard of living in the United States,because no producer in this country could possibly compete with such low wages.Discuss this assertion in the context of the Ricardian model of comparative advantage.

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Question 13

When compared with China,the growth of clothing exports originating in Bangladesh clearly illustrates the Ricardian model of comparative advantage.Discuss and explain.

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Question 14

We know that in antiquity,China exported silk because no one in any other country knew how to produce this product.From this information we know that

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Question 15

Mahatma Gandhi exhorted his followers in India to promote economic welfare by decreasing imports.This approach

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Question 16

The Ricardian model demonstrates that

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Question 17

An examination of the Ricardian model of comparative advantage yields the clear result that trade is (potentially)beneficial for each of the two trading partners since it allows for an expanded consumption choice for each.However,for the world as a whole the expansion of production of one product must involve a decrease in the availability of the other,so that it is not clear that trade is better for the world as a whole as compared to an initial situation of non-trade (but efficient production in each country).Are there in fact gains from trade for the world as a whole? Explain.

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Question 18

The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to

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Question 19

According to Ricardo,a country will have a comparative advantage in the product in which its

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Question 20

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How does the two-good,two-country version of the Ricardian model differ from the two-country,many-good model in terms of the determination which goods are produced and exported by each country?

-Given the information in the table above,Home's opportunity cost of widgets is

A nation engaging in trade according to the Ricardian model will find its consumption bundle

-Given the information in the table above.What is the opportunity cost of cloth in terms of Widgets in Foreign?

-Given the information in the table above,if it is ascertained that Foreign uses prison-slave labor to produce its exports,then home should

-Given the information in the table above,Home's opportunity cost of cloth is

-Given the information in the table above,if the world equilibrium price of widgets were 40 cloths,then

-Given the information in the table above.What is the opportunity cost of Cloth in terms of Widgets in Foreign?

If a production possibilities frontier is a straight line,then production occurs under conditions of

The earliest statement of the principle of comparative advantage is associated with

Which of the following statements is TRUE?

When compared with China,the growth of clothing exports originating in Bangladesh clearly illustrates the Ricardian model of comparative advantage.Discuss and explain.

We know that in antiquity,China exported silk because no one in any other country knew how to produce this product.From this information we know that

Mahatma Gandhi exhorted his followers in India to promote economic welfare by decreasing imports.This approach

The Ricardian model demonstrates that

The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to

According to Ricardo,a country will have a comparative advantage in the product in which its

Introduction

World Trade: an Overview

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

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Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, crisis, and Reform

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