Exam 2: Foundations of Modern Trade Theory Comparative Advantage

Which cannot be part of a digital trade?

Adam Smith contended that gold, silver, and other precious metals constituted the wealth of a nation.

Assuming increasing-cost conditions, trade between two countries would NOT be likely if they have

According to Adam Smith, international trade was a "win-win" situation since all nations could enjoy gains from trade.

The price-specie-flow mechanism illustrated why nations could not maintain trade surpluses or trade deficits over the long run.

Figure 2.2. Canadian Trade Possibilities ​ ​ -According to Figure 2.2, imports for Canada total

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

Modern trade theory recognizes that the pattern of world trade is governed by both demand conditions and supply conditions.

Suppose that international trade results in an outward shift in a country's production possibilities frontier.This would be described as

Mr.John, aged 58, has not completed his college education.He has been working in an automobile firm for the past 20 years.Now, the firm is shutting down operations in Los Angeles and planning to retain only one firm in Mexico.What would be the best path forward for Mr.John?

In a two-country, two-product world, the statement "Japan enjoys a comparative advantage over France in steel relative to bicycles" is equivalent to

If Argentina has a comparative advantage over Brazil in beef relative to coffee, Argentina will specialize in beef production.

If an economy is characterized by increasing opportunity costs, increasing the production of steel by constant amounts results in a constant rate of decrease in the production of autos.

The United States benefits from outsourcing in all of the following ways EXCEPT

Although Apple Inc.employs some 40,000 workers in the United States, it licenses most of the production of its Ipads and Ipods to Foxconn Technology Group, a company located in