Question 1

What is the idea behind fair­trade coffee?

Accepted Answer

A) ensuring a minimum price for the producers 
B) eliminating the middleman from the purchase of coffee 
C) ensuring a minimum price for the producers and to eliminate the middleman from the purchase of coffee 
D) ensuring a minimum price for the consumers 
A) ensuring a minimum price for the producers 
B) eliminating the middleman from the purchase of coffee 
C) ensuring a minimum price for the producers and to eliminate the middleman from the purchase of coffee 
D) ensuring a minimum price for the consumers C

Question 2

In general, the gains to some resources from free trade
Exceed losses suffered by other resources.This means
That, in principle:

Accepted Answer

A) the government should be able to tax resources that gain and compensate resources that lose, so all
Resources are better off with trade. 
B) the government should tax imports in order to reduce the losses suffered by some resources. 
C) the government ought to tax exports in order to collect revenue to compensate resources that lose from
Free trade. 
D) the government ought to tax returns on land because these always increase with free trade. 
A) the government should be able to tax resources that gain and compensate resources that lose, so all
Resources are better off with trade. 
B) the government should tax imports in order to reduce the losses suffered by some resources. 
C) the government ought to tax exports in order to collect revenue to compensate resources that lose from
Free trade. 
D) the government ought to tax returns on land because these always increase with free trade. A

Question 3

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in agricultural output.Will
Workers be better or worse off following the opening of
Trade with other countries?

Accepted Answer

A) Workers will be better off because the nominal wage increases. 
B) Workers will be worse off because the nominal wage decreases. 
C) Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the
Real wage in terms of the manufactured good falls. 
D) Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the
Real wage in terms of the manufactured good rises. 
A) Workers will be better off because the nominal wage increases. 
B) Workers will be worse off because the nominal wage decreases. 
C) Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the
Real wage in terms of the manufactured good falls. 
D) Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the
Real wage in terms of the manufactured good rises. D

Question 4

Bolivia's government attempted to solve some of its
Problems with inequality of outcomes due to foreign
Investment in its natural gas resources by:

Accepted Answer

A) taxing international firms. 
B) insisting that the firms pay higher wages to workers in the industry. 
C) shutting down the firms in the wake of protests. 
D) nationalizing the firms by reclaiming 51% ownership and raising taxes on foreign profits. 
A) taxing international firms. 
B) insisting that the firms pay higher wages to workers in the industry. 
C) shutting down the firms in the wake of protests. 
D) nationalizing the firms by reclaiming 51% ownership and raising taxes on foreign profits.

Question 5

Which specific factor loses from trade?

Accepted Answer

A) one that is specific to the importing industry 
B) one that is specific to the exporting industry 
C) one that is mobile between sectors 
D) None of these loses from trade. 
A) one that is specific to the importing industry 
B) one that is specific to the exporting industry 
C) one that is mobile between sectors 
D) None of these loses from trade.

Question 6

Suppose that land is specific to agriculture, capital is
specific to manufacturing, and labor is mobile between
sectors.If you know that the nominal income of capital
and labor has fallen, then what can you say about the
changes in the prices of manufactured goods and
agricultural goods?

Accepted Answer

Because the nominal income of capital ha

Question 7

When there are diminishing marginal returns to factors
Of production, the PPF is:

Accepted Answer

A) a negatively sloped straight line. 
B) bowed out from the origin. 
C) caved in toward the origin. 
D) a positively sloped straight line. 
A) a negatively sloped straight line. 
B) bowed out from the origin. 
C) caved in toward the origin. 
D) a positively sloped straight line.

Question 8

As relative prices in various industries change due to
Trade, the marginal product of the mobile resources
Used in the expanding industry __________, and the
Marginal product of the mobile resources used in the
Contracting industry __________.

Accepted Answer

A) rises; falls 
B) falls; rises 
C) remains the same; remains the same 
D) changes by exactly the same percentage; changes by exactly the same percentage 
A) rises; falls 
B) falls; rises 
C) remains the same; remains the same 
D) changes by exactly the same percentage; changes by exactly the same percentage

Question 9

Suppose that capital is mobile between sectors but that
there are two kinds of specific labor: skilled and
unskilled.If skilled labor prefers autarky to free trade,
what can you say about the number of skilled workers
relative to the number of unskilled workers?

Accepted Answer

You can say nothing about the relative n

Question 10

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in manufactured output.
Which specific factor will gain after trade occurs?

Accepted Answer

A) Capital 
B) Land 
C) both capital and land 
D) Labor 
A) Capital 
B) Land 
C) both capital and land 
D) Labor

Question 11

Which of the following BEST describes changes in U.S.
Manufacturing employment between 1973 and 2011?

Accepted Answer

A) Manufacturing employment fell, but manufacturing employment as a share of total U.S.employment rose. 
B) Manufacturing employment rose, but manufacturing employment as a share of total U.S.employment fell. 
C) Both manufacturing employment and manufacturing employment as a share of total U.S.employment fell. 
D) Both manufacturing employment and manufacturing employment as a share of total U.S.employment rose. 
A) Manufacturing employment fell, but manufacturing employment as a share of total U.S.employment rose. 
B) Manufacturing employment rose, but manufacturing employment as a share of total U.S.employment fell. 
C) Both manufacturing employment and manufacturing employment as a share of total U.S.employment fell. 
D) Both manufacturing employment and manufacturing employment as a share of total U.S.employment rose.

Question 12

Why do returns to specific factors change by more than
returns to mobile factors when international trade
changes relative prices?

Accepted Answer

Suppose labor is the mobile factor and c

Question 13

In what way do the conclusions of the Ricardian and
The specific­factors models differ?

Accepted Answer

A) In the specific­factors model, all resources (labor, land, capital) are better off with free trade.In the
Ricardian model, only labor is better off with free trade. 
B) In the Ricardian model, a country is better off with free trade.In the specific­factors model, some of a
Country's resources will be worse off with free trade. 
C) In the Ricardian model, some of a country's resources will be worse off with free trade.In the
Specific­factors model, some of a country's resources
Will be better off with free trade. 
D) In the Ricardian model, labor will be worse off with free trade.In the specific­factors model, labor will be
Better off with free trade. 
A) In the specific­factors model, all resources (labor, land, capital) are better off with free trade.In the
Ricardian model, only labor is better off with free trade. 
B) In the Ricardian model, a country is better off with free trade.In the specific­factors model, some of a
Country's resources will be worse off with free trade. 
C) In the Ricardian model, some of a country's resources will be worse off with free trade.In the
Specific­factors model, some of a country's resources
Will be better off with free trade. 
D) In the Ricardian model, labor will be worse off with free trade.In the specific­factors model, labor will be
Better off with free trade.

Question 14

In the specific­factors model, it is assumed that labor:

Accepted Answer

A) can move freely between the manufacturing and agricultural sectors. 
B) can move from the manufacturing to the agriculture sector, but not from the agricultural to the
Manufacturing sector. 
C) cannot move from one sector to the other. 
D) cannot move within a sector. 
A) can move freely between the manufacturing and agricultural sectors. 
B) can move from the manufacturing to the agriculture sector, but not from the agricultural to the
Manufacturing sector. 
C) cannot move from one sector to the other. 
D) cannot move within a sector.

Question 15

In the specific­factors model, an increase in the price of
The manufactured good will cause:

Accepted Answer

A) an increase in the wage in the manufacturing sector. 
B) capital to move from the agricultural to the manufacturing sector. 
C) land to move from the manufacturing to the agricultural sector. 
D) a decrease in the wage in the agricultural sector. 
A) an increase in the wage in the manufacturing sector. 
B) capital to move from the agricultural to the manufacturing sector. 
C) land to move from the manufacturing to the agricultural sector. 
D) a decrease in the wage in the agricultural sector.

Question 16

The specific­factors model concludes that if there is an
Increase in relative price (and an expansion) in one
Industry, the factor specific to that industry:

Accepted Answer

A) will experience an increase in its marginal product. 
B) will experience a decrease in its marginal product. 
C) will be transferred to other industries. 
D) will have competition as additional units of that specific factor are hired from other industries. 
A) will experience an increase in its marginal product. 
B) will experience a decrease in its marginal product. 
C) will be transferred to other industries. 
D) will have competition as additional units of that specific factor are hired from other industries.

Question 17

The Trade Adjustment Assistance program is:

Accepted Answer

A) an unemployment insurance program regardless of the reason for job loss. 
B) an unemployment insurance program that pays for job loss due to import competition. 
C) a subsidy program for the producers. 
D) a tax on importers of foreign goods. 
A) an unemployment insurance program regardless of the reason for job loss. 
B) an unemployment insurance program that pays for job loss due to import competition. 
C) a subsidy program for the producers. 
D) a tax on importers of foreign goods.

Question 18

Suppose that the Home country in the two­sector
(manufacturing and agriculture) specific­factors model
Has a comparative advantage in manufactured output.
What will happen to the marginal product of capital used
In manufacturing production when trade occurs?

Accepted Answer

A) It will fall. 
B) It will rise. 
C) It will not change. 
D) It will first fall, then rise. 
A) It will fall. 
B) It will rise. 
C) It will not change. 
D) It will first fall, then rise.

Question 19

In the specific­factors model, as more labor is added to
A sector, we will see:

Accepted Answer

A) the total product of labor decrease. 
B) the marginal product of labor increase. 
C) the average product of labor stay constant. 
D) the marginal product of labor decrease. 
A) the total product of labor decrease. 
B) the marginal product of labor increase. 
C) the average product of labor stay constant. 
D) the marginal product of labor decrease.

Question 20

Suppose that wages in the agricultural and
manufacturing sectors are $10 and $20 per hour,
respectively, and that the prices of both the agricultural
and manufactured good are both $50 per unit.What
are the marginal productivities of labor in the
agricultural and manufacturing sectors?

Accepted Answer

The wage equals the marginal revenue pro

What is the idea behind fairtrade coffee?

In general, the gains to some resources from free trade Exceed losses suffered by other resources.This means That, in principle:

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in agricultural output.Will Workers be better or worse off following the opening of Trade with other countries?

Bolivia's government attempted to solve some of its Problems with inequality of outcomes due to foreign Investment in its natural gas resources by:

Which specific factor loses from trade?

Suppose that land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors.If you know that the nominal income of capital and labor has fallen, then what can you say about the changes in the prices of manufactured goods and agricultural goods?

When there are diminishing marginal returns to factors Of production, the PPF is:

As relative prices in various industries change due to Trade, the marginal product of the mobile resources Used in the expanding industry , and the Marginal product of the mobile resources used in the Contracting industry .

Suppose that capital is mobile between sectors but that there are two kinds of specific labor: skilled and unskilled.If skilled labor prefers autarky to free trade, what can you say about the number of skilled workers relative to the number of unskilled workers?

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. Which specific factor will gain after trade occurs?

Which of the following BEST describes changes in U.S. Manufacturing employment between 1973 and 2011?

Why do returns to specific factors change by more than returns to mobile factors when international trade changes relative prices?

In what way do the conclusions of the Ricardian and The specificfactors models differ?

In the specificfactors model, it is assumed that labor:

In the specificfactors model, an increase in the price of The manufactured good will cause:

The specificfactors model concludes that if there is an Increase in relative price (and an expansion) in one Industry, the factor specific to that industry:

The Trade Adjustment Assistance program is:

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. What will happen to the marginal product of capital used In manufacturing production when trade occurs?

In the specificfactors model, as more labor is added to A sector, we will see:

Suppose that wages in the agricultural and manufacturing sectors are $10 and $20 per hour, respectively, and that the prices of both the agricultural and manufactured good are both $50 per unit.What are the marginal productivities of labor in the agricultural and manufacturing sectors?

The Global Economy

Trade and Technology: the Ricardian Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

International Agreements: Trade, Labor, and the Environment

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Filters

Exam 3: Gains and Losses From Trade in the Specific-Factors Model

What is the idea behind fair­trade coffee?

In general, the gains to some resources from free trade Exceed losses suffered by other resources.This means That, in principle:

Suppose that the Home country in the two­sector (manufacturing and agriculture) specific­factors model Has a comparative advantage in agricultural output.Will Workers be better or worse off following the opening of Trade with other countries?

Bolivia's government attempted to solve some of its Problems with inequality of outcomes due to foreign Investment in its natural gas resources by:

Which specific factor loses from trade?

Suppose that land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors.If you know that the nominal income of capital and labor has fallen, then what can you say about the changes in the prices of manufactured goods and agricultural goods?

When there are diminishing marginal returns to factors Of production, the PPF is:

As relative prices in various industries change due to Trade, the marginal product of the mobile resources Used in the expanding industry __________, and the Marginal product of the mobile resources used in the Contracting industry __________.

Suppose that capital is mobile between sectors but that there are two kinds of specific labor: skilled and unskilled.If skilled labor prefers autarky to free trade, what can you say about the number of skilled workers relative to the number of unskilled workers?

Suppose that the Home country in the two­sector (manufacturing and agriculture) specific­factors model Has a comparative advantage in manufactured output. Which specific factor will gain after trade occurs?

Which of the following BEST describes changes in U.S. Manufacturing employment between 1973 and 2011?

Why do returns to specific factors change by more than returns to mobile factors when international trade changes relative prices?

In what way do the conclusions of the Ricardian and The specific­factors models differ?

In the specific­factors model, it is assumed that labor:

In the specific­factors model, an increase in the price of The manufactured good will cause:

The specific­factors model concludes that if there is an Increase in relative price (and an expansion) in one Industry, the factor specific to that industry:

The Trade Adjustment Assistance program is:

Suppose that the Home country in the two­sector (manufacturing and agriculture) specific­factors model Has a comparative advantage in manufactured output. What will happen to the marginal product of capital used In manufacturing production when trade occurs?

In the specific­factors model, as more labor is added to A sector, we will see:

Suppose that wages in the agricultural and manufacturing sectors are $10 and $20 per hour, respectively, and that the prices of both the agricultural and manufactured good are both $50 per unit.What are the marginal productivities of labor in the agricultural and manufacturing sectors?

The Global Economy

Trade and Technology: the Ricardian Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

International Agreements: Trade, Labor, and the Environment

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Filters

What is the idea behind fairtrade coffee?

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in agricultural output.Will Workers be better or worse off following the opening of Trade with other countries?

As relative prices in various industries change due to Trade, the marginal product of the mobile resources Used in the expanding industry , and the Marginal product of the mobile resources used in the Contracting industry .

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. Which specific factor will gain after trade occurs?

In what way do the conclusions of the Ricardian and The specificfactors models differ?

In the specificfactors model, it is assumed that labor:

In the specificfactors model, an increase in the price of The manufactured good will cause:

The specificfactors model concludes that if there is an Increase in relative price (and an expansion) in one Industry, the factor specific to that industry:

Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model Has a comparative advantage in manufactured output. What will happen to the marginal product of capital used In manufacturing production when trade occurs?

In the specificfactors model, as more labor is added to A sector, we will see: