Exam 2: Trade and Technology: the Ricardian Model

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.Suppose that Home completely specializes, and it consumes 20 Tons of wheat after it begins trading with Foreign.Home trades with Foreign at a 1­to­1 ratio of corn for wheat.How many tons of corn does It consume when it trades with Foreign?

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 a ton of wheat with a day of labor.Foreign produces a ton Of corn and 0.5 ton of wheat.Without trade (in autarky), Home's daily Production is 20 tons of wheat and 10 tons of corn.At which International price will Home's gains from trade be largest?

With the assumption that the marginal product of labor is constant and That labor is the only variable resource, the slope of the PPF is:

SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGE Poland requires 4 hours of labor to produce a ton of coal and 10 hours of Labor to produce 10 bushels of wheat.The Czech Republic requires 6 Hours of labor to produce a ton of coal and 10 hours of labor to produce 10 bushels of wheat. Reference: Ref 2­5 (Scenario: Absolute and Comparative Advantage) Which country has an Absolute advantage in the production of wheat?

David Ricardo believed that:

To complete the model of international trade using the PPF, we must also Use the idea of indifference curves.These curves represent:

The Ricardian model can be simplified and made more explanatory by Assuming that there is only one resource used in producing goods.What Did Ricardo assume the resource was?

It is possible to determine how much a nation will import at various International prices, other things being equal, by finding a set of Equilibria.This schedule is the:

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.Which product does Home Export?

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. (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.We conclude that The change in Home's export price means that Home was worse off in 2010 than it was in 2009.Which of the following statements best Explains this conclusion?

What does the term value added per hour help us measure?

According to the Ricardian principle of comparative advantage, International trade increases a nation's total output because:

What is the marginal product of labor?

The increase in total utility derived from trading products is called:

Using the marginal product theory of wages, a worker's "real" wage is:

Ricardo's theory showed that if nations are allowed to trade freely, the Result will be that:

SCENARIO: CHILE AND ARGENTINA Chile and Argentina each produce jellybeans and peanut butter, using Labor as their only resource.Each country has 1,000 hours of labor.In Chile, an hour produces a pound of jellybeans and 2 hours produce a Pound of peanut butter.In Argentina, an hour produces a pound of Jellybeans and 3 hours produces a pound of peanut butter.When they do Not trade with each other, Chile consumes 600 pounds of jellybeans and 200 pounds of peanut butter, and Argentina consumes 400 pounds of Jellybeans and 200 pounds of peanut butter. Reference: Ref 2­10 (Scenario: Chile and Argentina) Suppose that Chile and Argentina begin To trade with each other.Each completely specializes in the product in Which it finds its comparative advantage.How many more pounds of Peanut butter and jellybeans do the two countries jointly produce Compared with production before they began to trade?

SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGE Poland requires 4 hours of labor to produce a ton of coal and 10 hours of Labor to produce 10 bushels of wheat.The Czech Republic requires 6 Hours of labor to produce a ton of coal and 10 hours of labor to produce 10 bushels of wheat. Reference: Ref 2­5 (Scenario: Absolute and Comparative Advantage) Suppose that Poland Has 1,000 hours of labor and that it completely specializes according to Its comparative advantage.How many units of which product will it Produce?

If a consumer moves to a higher indifference curve, her satisfaction:

Figure: International Trade Equilibrium (Figure: International Trade Equilibrium) Which is the "before trade" point of production and consumption?