Question 1

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Accepted Answer

A) is producing exports indirectly more efficiently than it could alternatively. 
B) is producing imports indirectly more efficiently than it could domestically. 
C) is producing exports using fewer labor units. 
D) is producing imports indirectly using fewer labor units. 
E) is producing exports while outsourcing services. 
A) is producing exports indirectly more efficiently than it could alternatively. 
B) is producing imports indirectly more efficiently than it could domestically. 
C) is producing exports using fewer labor units. 
D) is producing imports indirectly using fewer labor units. 
E) is producing exports while outsourcing services.

Question 2

-Given the information in the table above,if the world equilibrium price of widgets were 4 cloth,then

Accepted Answer

A) both countries could benefit from trade with each other. 
B) neither country could benefit from trade with each other. 
C) each country will want to export the good in which it enjoys comparative advantage. 
D) neither country will want to export the good in which it enjoys comparative advantage. 
E) both countries will want to specialize in cloth. 
A) both countries could benefit from trade with each other. 
B) neither country could benefit from trade with each other. 
C) each country will want to export the good in which it enjoys comparative advantage. 
D) neither country will want to export the good in which it enjoys comparative advantage. 
E) both countries will want to specialize in cloth.

Question 3

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.

Accepted Answer

(a)Argentina has an absolute advantage i

Question 4

The Country of Rhozundia is blessed with rich copper deposits.The cost of copper produced (relative to the cost of widgets produced)is therefore very low.From this information we know that

Accepted Answer

A) Rhozundia has a comparative advantage in copper. 
B) Rhozundia should import copper and export widgets. 
C) Rhozundia should export both widgets and copper. 
D) Rhozundia should invest in more widget production. 
E) Rhozundia may or may not have a comparative advantage in copper. 
A) Rhozundia has a comparative advantage in copper. 
B) Rhozundia should import copper and export widgets. 
C) Rhozundia should export both widgets and copper. 
D) Rhozundia should invest in more widget production. 
E) Rhozundia may or may not have a comparative advantage in copper.

Question 5

Which of the following is most likely to be an untraded good in a Ricardian two-country,multi-good model?

Accepted Answer

A) steel 
B) textiles 
C) haircuts 
D) petroleum 
E) telemarketer services 
A) steel 
B) textiles 
C) haircuts 
D) petroleum 
E) telemarketer services

Question 6

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.

Accepted Answer

(a)The U.S.has an absolute advantage in

Question 7

-Given the information in the table above,if wages were to double in Home,then Home should

Accepted Answer

A) export cloth. 
B) export widgets. 
C) export both and import nothing. 
D) export and import nothing. 
E) export widgets and import cloth. 
A) export cloth. 
B) export widgets. 
C) export both and import nothing. 
D) export and import nothing. 
E) export widgets and import cloth.

Question 8

In the Ricardian model,comparative advantage is likely to be due to

Accepted Answer

A) scale economies. 
B) home product taste bias. 
C) greater capital availability per worker. 
D) labor productivity differences. 
E) political pressure. 
A) scale economies. 
B) home product taste bias. 
C) greater capital availability per worker. 
D) labor productivity differences. 
E) political pressure.

Question 9

Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan if

Accepted Answer

A) U)S.labor productivity equaled 40 units per hour and Japan's 15 units per hour. 
B) U)S.labor productivity equaled 30 units per hour and Japan's 20 units per hour. 
C) U)S.labor productivity equaled 20 units per hour and Japan's 30 units per hour. 
D) U)S.labor productivity equaled 15 units per hour and Japan's 25 units per hour. 
E) U)S.labor productivity equaled 15 units per hour and Japan's 40 units per hour. 
A) U)S.labor productivity equaled 40 units per hour and Japan's 15 units per hour. 
B) U)S.labor productivity equaled 30 units per hour and Japan's 20 units per hour. 
C) U)S.labor productivity equaled 20 units per hour and Japan's 30 units per hour. 
D) U)S.labor productivity equaled 15 units per hour and Japan's 25 units per hour. 
E) U)S.labor productivity equaled 15 units per hour and Japan's 40 units per hour.

Question 10

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

Accepted Answer

A) 0)5. 
B) 2)0. 
C) 6)0. 
D) 1)5. 
E) 3)0. 
A) 0)5. 
B) 2)0. 
C) 6)0. 
D) 1)5. 
E) 3)0.

Question 11

In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ________ unit labor requirements.

Accepted Answer

A) one 
B) two 
C) three 
D) four 
E) five 
A) one 
B) two 
C) three 
D) four 
E) five

Question 12

If labor productivities were exactly proportional to wage levels internationally,this would

Accepted Answer

A) not negate the logical basis for trade in the Ricardian model. 
B) render the Ricardian model theoretically correct but practically useless. 
C) negate the logical basis for trade in the Ricardian model. 
D) negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners. 
E) demonstrate the validity of the Ricardian model. 
A) not negate the logical basis for trade in the Ricardian model. 
B) render the Ricardian model theoretically correct but practically useless. 
C) negate the logical basis for trade in the Ricardian model. 
D) negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners. 
E) demonstrate the validity of the Ricardian model.

Question 13

-Given the information in the table above,if the Home economy suffered a meltdown,and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

Accepted Answer

A) export cloth. 
B) export widgets. 
C) export both and import nothing. 
D) export and import nothing. 
E) export widgets and import cloth. 
A) export cloth. 
B) export widgets. 
C) export both and import nothing. 
D) export and import nothing. 
E) export widgets and import cloth.

Question 14

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

Accepted Answer

While Bangladesh has an absolute disadva

Question 15

Assume that transportation costs are especially high for Widgets in the two-country,two-product Ricardian model,and Country A enjoys a comparative advantage in Widgets,then

Accepted Answer

A) country B must also enjoy a comparative advantage in Widgets. 
B) country B may end up exporting Widgets. 
C) country A may switch to having a comparative advantage in the other good. 
D) country A will still export Widgets. 
E) trade may be impossible between the two countries. 
A) country B must also enjoy a comparative advantage in Widgets. 
B) country B may end up exporting Widgets. 
C) country A may switch to having a comparative advantage in the other good. 
D) country A will still export Widgets. 
E) trade may be impossible between the two countries.

Question 16

The two-country,multi-product model differs from the two-country,two-product model in that,in the former

Accepted Answer

A) the relative wage ratio will determine the pattern of trade ( which good is exported by which country). 
B) which country will export which product is determined entirely by labor productivity data. 
C) full specialization is likely to hold in equilibrium. 
D) none of the goods are potentially nontraded. 
E) domestic relative prices are not relevant. 
A) the relative wage ratio will determine the pattern of trade ( which good is exported by which country). 
B) which country will export which product is determined entirely by labor productivity data. 
C) full specialization is likely to hold in equilibrium. 
D) none of the goods are potentially nontraded. 
E) domestic relative prices are not relevant.

Question 17

The growth of clothing exports originating in Bangladesh is the result of the

Accepted Answer

A) high productivity of workers in Bangladesh. 
B) low wages in Bangladesh. 
C) low productivity of workers in other countries. 
D) low productivity of workers in Bangladesh in industries other than those that produce clothing for export. 
E) high wages in other countries. 
A) high productivity of workers in Bangladesh. 
B) low wages in Bangladesh. 
C) low productivity of workers in other countries. 
D) low productivity of workers in Bangladesh in industries other than those that produce clothing for export. 
E) high wages in other countries.

Question 18

In a two-product,two-country world,international trade can lead to increases in

Accepted Answer

A) consumer welfare only if output of both products is increased. 
B) output of both products and consumer welfare in both countries. 
C) total production of both products but not consumer welfare in both countries. 
D) consumer welfare in both countries but not total production of both products. 
E) prices of both goods in both countries. 
A) consumer welfare only if output of both products is increased. 
B) output of both products and consumer welfare in both countries. 
C) total production of both products but not consumer welfare in both countries. 
D) consumer welfare in both countries but not total production of both products. 
E) prices of both goods in both countries.

Question 19

Trade between two countries can benefit both countries if

Accepted Answer

A) each country exports that good in which it has a comparative advantage. 
B) each country enjoys superior terms of trade. 
C) each country has a more elastic demand for the imported goods. 
D) each country has a more elastic supply for the exported goods. 
E) each country produces a wide range of goods for export. 
A) each country exports that good in which it has a comparative advantage. 
B) each country enjoys superior terms of trade. 
C) each country has a more elastic demand for the imported goods. 
D) each country has a more elastic supply for the exported goods. 
E) each country produces a wide range of goods for export.

Question 20

The pauper labor and the exploitation arguments

Accepted Answer

A) are theoretical weaknesses that limit the applicability of the Ricardian concept of comparative advantage. 
B) are theoretically irrelevant to the Ricardian model,and do not limit its logical relevance. 
C) are not relevant because the Ricardian model is based on the labor theory of value. 
D) are not relevant because the Ricardian model allows for different technologies in different countries. 
E) invalidate the Ricardian model. 
A) are theoretical weaknesses that limit the applicability of the Ricardian concept of comparative advantage. 
B) are theoretically irrelevant to the Ricardian model,and do not limit its logical relevance. 
C) are not relevant because the Ricardian model is based on the labor theory of value. 
D) are not relevant because the Ricardian model allows for different technologies in different countries. 
E) invalidate the Ricardian model.

A country engaging in trade according to the principles of comparative advantage gains from trade because it

-Given the information in the table above,if the world equilibrium price of widgets were 4 cloth,then

The Country of Rhozundia is blessed with rich copper deposits.The cost of copper produced (relative to the cost of widgets produced)is therefore very low.From this information we know that

Which of the following is most likely to be an untraded good in a Ricardian two-country,multi-good model?

-Given the information in the table above,if wages were to double in Home,then Home should

In the Ricardian model,comparative advantage is likely to be due to

Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan if

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

In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ________ unit labor requirements.

If labor productivities were exactly proportional to wage levels internationally,this would

-Given the information in the table above,if the Home economy suffered a meltdown,and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

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

Assume that transportation costs are especially high for Widgets in the two-country,two-product Ricardian model,and Country A enjoys a comparative advantage in Widgets,then

The two-country,multi-product model differs from the two-country,two-product model in that,in the former

The growth of clothing exports originating in Bangladesh is the result of the

In a two-product,two-country world,international trade can lead to increases in

Trade between two countries can benefit both countries if

The pauper labor and the exploitation arguments

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

Output and the Exchange Rate in the Short Run

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

Filters

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

A country engaging in trade according to the principles of comparative advantage gains from trade because it

-Given the information in the table above,if the world equilibrium price of widgets were 4 cloth,then

The Country of Rhozundia is blessed with rich copper deposits.The cost of copper produced (relative to the cost of widgets produced)is therefore very low.From this information we know that

Which of the following is most likely to be an untraded good in a Ricardian two-country,multi-good model?

-Given the information in the table above,if wages were to double in Home,then Home should

In the Ricardian model,comparative advantage is likely to be due to

Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan if

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

In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ________ unit labor requirements.

If labor productivities were exactly proportional to wage levels internationally,this would

-Given the information in the table above,if the Home economy suffered a meltdown,and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

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

Assume that transportation costs are especially high for Widgets in the two-country,two-product Ricardian model,and Country A enjoys a comparative advantage in Widgets,then

The two-country,multi-product model differs from the two-country,two-product model in that,in the former

The growth of clothing exports originating in Bangladesh is the result of the

In a two-product,two-country world,international trade can lead to increases in

Trade between two countries can benefit both countries if

The pauper labor and the exploitation arguments

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

Output and the Exchange Rate in the Short Run

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

Filters