Exam 2: Foundations of Modern Trade Theory: Comparative Advantage

If a production possibilities schedule appears as a downward sloping straight line,there occurs

Table 2.3.Terms of Trade -Referring to Table 2.3,which countries' terms of trade improved between 1990 and 2004?

The trade theories of Adam Smith and David Ricardo viewed the determination of competitiveness from the demand side of the market.

The gains from trade are closely related to the difference between the autarky price and the international terms of trade (international price).

Table 2.1.Output Possibilities of the U.S.and the U.K. -Referring to Table 2.1,the United States has the absolute advantage in the production of:

For the commodity terms of trade to improve,a country's import price index must rise relative to its export price index over a given time period.

The best explanation of the gains from trade that David Ricardo could provide was to describe only the outer limits within which the equilibrium terms of trade would fall.This is because Ricardo's theory did not recognize how market prices are influenced by:

A nation that gains from trade will find its consumption point being located:

Who gains more from trade,when nations are of unequal economic size?

The terms of trade represents the rate of exchange between a country's exports and imports.

Analysts wide agree that Boeing's use of production outsourcing for its 787 has been highly successful in generating greater efficiencies in jetliner production.

Table 2.3.Terms of Trade -Referring to Table 2.3,which countries' terms of trade worsened between 1990 and 2004?

Table 2.1.Output Possibilities of the U.S.and the U.K. -Refer to Table 2.1.Mutually advantageous trade will occur between the United States and the United Kingdom so long as one ton of steel trades for:

The theory of reciprocal demand asserts that as the U.S.demand for Canadian wheat rises,the equilibrium terms of trade improve for the United States.

It is possible for a nation not to have an absolute advantage in anything; but it is not possible for one nation to have a comparative advantage in everything and the other nation to have a comparative advantage in nothing.

Differences in relative product prices between two nations can be attributed to differences in

If Japan loses competitiveness in computers,Japanese computer workers lose jobs to foreign computer workers and the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers.

The mercantilists contended that because one nation's gains from trade come the expense of its trading partners,not all nations could simultaneously realize gains from trade.

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

Although J.S.Mill recognized that the region of mutually beneficial trade is bounded by the cost ratios of two countries,it was not until David Ricardo developed the theory of reciprocal demand that the equilibrium terms of trade could be determined.