Exam 2: Foundations of Modern Trade Theory: Comparative Advantage

Table 2.1.Output Possibilities of the U.S.and the U.K. -Referring to Table 2.1,the opportunity cost of producing one ton of steel in the United States is:

Ricardo's model of comparative advantage assumed all of the following except:

When nations are of similar size,and have similar taste patterns,the gains from trade

Because the Ricardian theory of comparative advantage was based only on a nation's demand conditions,it could not fully explain the distribution of the gains from trade among trading partners.

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

The presence of increasing opportunity costs gives rises to production possibilities schedules that are

Explain the Law of Comparative Advantage.

The existence of exit barriers tends to delay the closing of inefficient firms that face international competitive disadvantages.

Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries' domestic cost ratios.

During the 1980s,U.S.iron ore workers realized dynamic gains from trade due to

Assume that the United States and Canada engage in trade.If the international terms of trade coincides with the Canadian cost ratio,the United States realizes all of the gains from trade with Canada.

In autarky equilibrium,a nation realizes the lowest possible level of satisfaction given the constraint of its production possibilities schedule.

Table 2.2.Output possibilities for South Korea and Japan -Referring to Table 2.2,the opportunity cost of one VCR in South Korea is:

MacDougall's empirical study of comparative advantage was based on the notion that a product's labor cost is underlaid by labor productivity and the wage rate.

Concerning international trade restrictions,which of the following is false? Trade restrictions:

The use of indifference curves helps us determine the point:

The trading principle formulated by Adam Smith maintained that:

Outsourcing (offshoring)

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

If Canada has a higher wage level and higher labor productivity than Mexico,Canada will necessarily produce a good at a higher labor cost than Mexico.