Exam 2: Foundations of Modern Trade Theory: Comparative Advantage

Figure 2.2 illustrates trade data for Canada.The figure assumes that Canada attains international trade equilibrium at point C. Figure 2.2.Canadian Trade Possibilities -Consider Figure 2.2.With trade,Canada consumes:

David Ricardo's simplified trade model is based on all of the assumptions except

Which of the following terms-of-trade concepts is calculated by dividing the change in a country's export price index by the change in its import price index between two points in time,multiplied by 100 to express the terms of trade in percentages?

The introduction of community indifference curves into our trading example focuses attention on the nation's:

A fall in the price of imports or a rise in the price of exports will:

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

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

An improvement in a nation's terms of trade occurs if the prices of its exports rise relative to the prices of its imports over a given time period.

Introducing indifference curves into our trade model permits us to determine:

For the United States,outsourcing tends to result from

Figure 2.4 Production Possibilities Frontier -In Figure 2.4 the marginal rate of transformation of autos into wheat is

Table 2.2.Output possibilities for South Korea and Japan -Refer to Table 2.2.With international trade,what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each VCR?

"The equilibrium relative commodity price at which trade takes place is determined by the conditions of demand and supply for each commodity in both nations.Other things being equal,the nation with the more intense demand for the other nation's exported good will gain less from trade than the nation with the less intense demand." This statement was first proposed by:

The gains from international trade increase as:

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

The dynamic gains from trade include all of the following except:

If Mexico was to realize an increase in its factors of production,its production possibilities curve would shift inward toward the origin of the diagram.

The marginal rate of transformation equals the absolute slope of a country's production possibilities schedule.

Figure 2.1.Production Possibilities Schedule -Refer to Figure 2.1.If the relative cost of aluminum were to rise,then the production possibilities schedule would:

Ricardo's theory of comparative advantage was of limited relevance to the real world since it assumed that labor was only one of several factors of production.