Exam 2: Trade and Technology: the Ricardian Model

Compare the absolute advantages in U.S.and Chinese wheat and textile production to explain why the U.S.imports textile products from China, even though the typical U.S.textile worker is 7 to 16 times more productive than the typical Chinese textile worker.

If export prices are higher than the import prices, what can we expect The wages in the export sector to do?

Figure: International Trade Equilibrium (Figure: International Trade Equilibrium) After trade, how many units of cloth will this nation consume?

SCENARIO: HOME'S WILLINGNESS TO TRADE WHEAT FOR CLOTH Home has a comparative advantage in wheat, and Foreign has a Comparative advantage in cloth.Once trade occurs, Home produces 1,500 bushels of wheat, and Foreign produces 1,000 yards of cloth.The Following table shows the amount of wheat that Home is willing to trade To acquire more cloth. Reference: Ref 2­13 (Scenario: Home's Willingness to Trade Wheat for Cloth) Suppose that Home's export price rose from 0.5 bushel of wheat per yard of cloth in 2009 to a bushel of wheat per yard of cloth in 2010.Which of the Following statements is TRUE?

When a firm in one nation purchases unfinished products internationally And adds further processing to sell in the domestic market, this is known As:

If the opportunity cost is constant (the PPF is a straight line), then a Country will:

Figure: Indifference Curves (Figure: Indifference Curves) Of the following points of consumption, Which is LEAST desirable for consumers?

According to Ricardo:

Which of the following is the MOST likely explanation for a Detroit Construction company's imports of Canadian concrete blocks made in Windsor, Ontario?

Where will a nation that gains from trade find its consumption point Located?

As nations trade, their total level of utility (satisfaction from consuming Goods):

Assume that two countries (Home and Foreign) each produce two goods (corn and wheat) under constant cost production.Home produces 0.5 Ton of corn or 1 ton of wheat with a day of labor.Without trade (in Autarky), Home's daily production is 20 tons of wheat and 10 tons of Corn.What is Home's price of corn in autarky?

Among the indifference curves for an economy, to achieve higher utility:

Which of the following is NOT a reason why countries trade goods with One another?

SCENARIO: ABSOLUTE ADVANTAGE The United States requires 20 hours of labor to produce a ton of steel And 30 hours of labor to produce 1,000 board feet of lumber.In Canada, 20 hours of labor are required to produce a ton of steel and 25 hours of Labor to produce 1,000 board feet of lumber. Reference: Ref 2­4 (Scenario: Absolute Advantage) Which country has an absolute Advantage in the production of steel?

When the production possibilities frontier is a straight line, then Production occurs under conditions of:

SCENARIO: ABSOLUTE ADVANTAGE The United States requires 20 hours of labor to produce a ton of steel And 30 hours of labor to produce 1,000 board feet of lumber.In Canada, 20 hours of labor are required to produce a ton of steel and 25 hours of Labor to produce 1,000 board feet of lumber. Reference: Ref 2­4 (Scenario: Absolute Advantage) Which country has a comparative Advantage in the production of lumber?

Figure: Upperia's Production and Consumption (Figure: Upperia's Production and Consumption) The graph shows Upperia's international trading pattern.Point P is production with trade, And point C is consumption with trade.Assume that the marginal product Of labor in producing shoes is one pair per hour.How many hours of Labor occur in Upperia?

At some point, as the price of exported products is bid up and the price Of the product imported falls, the prices of the products in both nations:

Whenever a nation has a lower opportunity cost of producing any good Or service in relative terms, that nation is said to have: