Question 1

If the foreign import demand curve intersects the home country's export
Supply curve in its horizontal portion, then:

Accepted Answer

A) the home country will suffer a loss from international trade. 
B) the home country will not gain from trade. 
C) the home country will gain from trade. 
D) the foreign country will not gain from trade. 
A) the home country will suffer a loss from international trade. 
B) the home country will not gain from trade. 
C) the home country will gain from trade. 
D) the foreign country will not gain from trade.

Question 2

Which of the following statements describe what the Ricardian model
Predicts as a nation improves its technology and productivity?
I.Its standard of living will rise.
II.Wages of its workers will rise.
III.It will lose its absolute advantage.

Accepted Answer

A) I 
B) II 
C) III 
D) I and II 
A) I 
B) II 
C) III 
D) I and II

Question 3

The case study of wages and productivity in the textbook demonstrates
That:

Accepted Answer

A) workers lose out when international trade occurs. 
B) internationally, worker productivity varies directly with real wages. 
C) workers who get educated get higher wages. 
D) workers become more productive, but most of the value added goes to the owners of capital. 
A) workers lose out when international trade occurs. 
B) internationally, worker productivity varies directly with real wages. 
C) workers who get educated get higher wages. 
D) workers become more productive, but most of the value added goes to the owners of capital.

Question 4

Which of the following statements describes the way our home
Equilibrium reflects the concepts of competitive markets?
I.The opportunity cost of each good is the inverse of the ratio of labor
Productivity.
II.Prices of each good reflect opportunity cost.
III.Wages are equal and reflect the value of the marginal product of
Labor (MPL × P) for each good.

Accepted Answer

A) I 
B) II 
C) III 
D) I, II, and III 
A) I 
B) II 
C) III 
D) I, II, and III

Question 5

Assume that Germany and China can produce beer and cloth.If the
MPLc/MPLb for Germany is 2/5 and MPLc/MPLb for China is 1, then
Germany should:

Accepted Answer

A) specialize in producing beer and export beer. 
B) specialize in producing cloth and export cloth. 
C) not specialize, because Germany will not benefit from it. 
D) specialize in producing cloth and import cloth. 
A) specialize in producing beer and export beer. 
B) specialize in producing cloth and export cloth. 
C) not specialize, because Germany will not benefit from it. 
D) specialize in producing cloth and import cloth.

Question 6

With trade, a country will maximize its economic well­being when it:

Accepted Answer

A) moves to the highest possible indifference curve. 
B) forces the marginal rate of substitution to its lowest possible value. 
C) consumes more of both goods than it does in autarky. 
D) finds its marginal rate of substitution exceeding its marginal rate of transformation. 
A) moves to the highest possible indifference curve. 
B) forces the marginal rate of substitution to its lowest possible value. 
C) consumes more of both goods than it does in autarky. 
D) finds its marginal rate of substitution exceeding its marginal rate of transformation.

Question 7

Compared with constant cost production, if production occurs under
Increasing cost conditions, it is MORE likely that countries will:

Accepted Answer

A) completely specialize. 
B) incompletely specialize. 
C) not engage in international trade. 
D) trade with one another. 
A) completely specialize. 
B) incompletely specialize. 
C) not engage in international trade. 
D) trade with one another.

Question 8

SCENARIO: RELATIVE PRICES AND TRADE LEVELS
Home has a comparative advantage in wheat, and Foreign has a
Comparative advantage in cloth.Once trade occurs, Home produces
1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth.The
Following table shows the amount of wheat that Home is willing to supply
And Foreign is willing to buy at various international prices.  
(Scenario: Relative Prices and Trade Levels) How many bushels of wheat
Will Foreign import?

Accepted Answer

A) 900 bushels 
B) 700 bushels 
C) 500 bushels 
D) 300 bushels 
A) 900 bushels 
B) 700 bushels 
C) 500 bushels 
D) 300 bushels

Question 9

SCENARIO: United States Versus United Kingdom
In the United States, one worker can produce 10 tons of steel per day or
20 tons of chemicals per day.In the United Kingdom, one worker can
Produce 5 tons of steel per day or 15 tons of chemicals per day.
Reference: Ref 2­11
(Scenario: United States Versus United Kingdom) The United Kingdom
Has the absolute advantage in the production of:

Accepted Answer

A) steel. 
B) chemicals. 
C) The United Kingdom has the absolute advantage in neither steel nor chemicals. 
D) The United Kingdom has the absolute advantage in both steel and chemicals. 
A) steel. 
B) chemicals. 
C) The United Kingdom has the absolute advantage in neither steel nor chemicals. 
D) The United Kingdom has the absolute advantage in both steel and chemicals.

Question 10

Production possibilities frontiers in the Ricardian model:

Accepted Answer

A) are linear (i.e., straight lines), with end points showing a country's production when it produces only one or the other good. 
B) are bowed out from the origin, with end points showing a country's production when it produces only one or the other good. 
C) are linear and begin from the origin. 
D) are curvilinear and increase at a decreasing rate. 
A) are linear (i.e., straight lines), with end points showing a country's production when it produces only one or the other good. 
B) are bowed out from the origin, with end points showing a country's production when it produces only one or the other good. 
C) are linear and begin from the origin. 
D) are curvilinear and increase at a decreasing rate.

Question 11

A nation will gain from trade if it:

Accepted Answer

A) produces and consumes along its PPF. 
B) produces outside its PPF and consumes along its PPF. 
C) consumes outside its PPF and produces along its PPF. 
D) produces and consumes outside its PPF. 
A) produces and consumes along its PPF. 
B) produces outside its PPF and consumes along its PPF. 
C) consumes outside its PPF and produces along its PPF. 
D) produces and consumes outside its PPF.

Question 12

Assume the MPLc = 2 cars and the MPLb = 5 boats.There are 150
Workers in this hypothetical economy.What is the maximum number of
Boats that can be produced?

Accepted Answer

A) 30 
B) 300 
C) 750 
D) 150 
A) 30 
B) 300 
C) 750 
D) 150

Question 13

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 steel?

Accepted Answer

A) the United States 
B) Canada 
C) Neither the United States nor Canada has a comparative advantage. 
D) Both the United States and Canada have a comparative advantage. 
A) the United States 
B) Canada 
C) Neither the United States nor Canada has a comparative advantage. 
D) Both the United States and Canada have a comparative advantage.

Question 14

If the maximum number of units of cloth produced is 300 and the
Maximum number of units of corn produced is 600, then with a MPLcloth
= 2, what is the number of workers in the economy?

Accepted Answer

A) 100 
B) 200 
C) 150 
D) 600 
A) 100 
B) 200 
C) 150 
D) 600

Question 15

If a country has a comparative advantage in producing rice and a
comparative disadvantage in producing pencils, does the Ricardian model
predict that the real wage in rice production will fall and the real wage in
pencil production will rise as a result of international trade?

Accepted Answer

No; the Ricardian model predicts that re

Question 16

It is possible to determine how much a nation will export over and above
Its domestic consumption at various international prices, other things
Being equal, by finding a set of equilibria.This schedule is:

Accepted Answer

A) the import demand curve for a nation. 
B) the export supply curve for a nation. 
C) the production possibilities frontier for a nation. 
D) the "no­trade" equilibrium. 
A) the import demand curve for a nation. 
B) the export supply curve for a nation. 
C) the production possibilities frontier for a nation. 
D) the "no­trade" equilibrium.

Question 17

Ricardo's theory made a number of assumptions, including which of the
Following?

Accepted Answer

A) Nations had balanced trade with their partners. 
B) There were no barriers to trade (free trade). 
C) There was no transfer of gold or silver. 
D) Nations had balanced trade with their partners, and there were no barriers to trade (free trade). 
A) Nations had balanced trade with their partners. 
B) There were no barriers to trade (free trade). 
C) There was no transfer of gold or silver. 
D) Nations had balanced trade with their partners, and there were no barriers to trade (free trade).

Question 18

SCENARIO: RELATIVE PRICES AND TRADE LEVELS
Home has a comparative advantage in wheat, and Foreign has a
Comparative advantage in cloth.Once trade occurs, Home produces
1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth.The
Following table shows the amount of wheat that Home is willing to supply
And Foreign is willing to buy at various international prices.  
 
(Scenario: Relative Prices and Trade Levels) What is the international
Price of wheat?

Accepted Answer

A) 1 yard/bushel 
B) 3 yards/bushel 
C) 5 yards/bushel 
D) 7 yards/bushel 
A) 1 yard/bushel 
B) 3 yards/bushel 
C) 5 yards/bushel 
D) 7 yards/bushel

Question 19

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) What is the price of peanut butter in
Argentina before the two countries begin to trade with each other?

Accepted Answer

A) 1/3 pound of jellybeans per pound of peanut butter 
B) 1/2 pound of jellybeans per pound of peanut butter 
C) 2 pounds of jellybeans per pound of peanut butter 
D) 3 pounds of jellybeans per pound of peanut butter 
A) 1/3 pound of jellybeans per pound of peanut butter 
B) 1/2 pound of jellybeans per pound of peanut butter 
C) 2 pounds of jellybeans per pound of peanut butter 
D) 3 pounds of jellybeans per pound of peanut butter

Question 20

Suppose that the U.S.price index for its imports rose from 100 to 120
From 2010 to 2011 and the price index for its exports remained
Unchanged.Which of the following statements is CORRECT?

Accepted Answer

A) The U.S.terms of trade worsened between 2010 and 2011. 
B) The U.S.terms of trade improved between 2010 and 2011. 
C) The U.S.terms of trade improved in 2010 and worsened in 2011. 
D) There was no change in the U.S.terms of trade between 2010 and 2011. 
A) The U.S.terms of trade worsened between 2010 and 2011. 
B) The U.S.terms of trade improved between 2010 and 2011. 
C) The U.S.terms of trade improved in 2010 and worsened in 2011. 
D) There was no change in the U.S.terms of trade between 2010 and 2011.

If the foreign import demand curve intersects the home country's export Supply curve in its horizontal portion, then:

Which of the following statements describe what the Ricardian model Predicts as a nation improves its technology and productivity? I.Its standard of living will rise. II.Wages of its workers will rise. III.It will lose its absolute advantage.

The case study of wages and productivity in the textbook demonstrates That:

Assume that Germany and China can produce beer and cloth.If the MPLc/MPLb for Germany is 2/5 and MPLc/MPLb for China is 1, then Germany should:

With trade, a country will maximize its economic wellbeing when it:

Compared with constant cost production, if production occurs under Increasing cost conditions, it is MORE likely that countries will:

Production possibilities frontiers in the Ricardian model:

A nation will gain from trade if it:

Assume the MPLc = 2 cars and the MPLb = 5 boats.There are 150 Workers in this hypothetical economy.What is the maximum number of Boats that can be produced?

If the maximum number of units of cloth produced is 300 and the Maximum number of units of corn produced is 600, then with a MPLcloth = 2, what is the number of workers in the economy?

If a country has a comparative advantage in producing rice and a comparative disadvantage in producing pencils, does the Ricardian model predict that the real wage in rice production will fall and the real wage in pencil production will rise as a result of international trade?

It is possible to determine how much a nation will export over and above Its domestic consumption at various international prices, other things Being equal, by finding a set of equilibria.This schedule is:

Ricardo's theory made a number of assumptions, including which of the Following?

Suppose that the U.S.price index for its imports rose from 100 to 120 From 2010 to 2011 and the price index for its exports remained Unchanged.Which of the following statements is CORRECT?

The Global Economy

Gains and Losses From Trade in the Specific-Factors 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 2: Trade and Technology: the Ricardian Model

If the foreign import demand curve intersects the home country's export Supply curve in its horizontal portion, then:

Which of the following statements describe what the Ricardian model Predicts as a nation improves its technology and productivity? I.Its standard of living will rise. II.Wages of its workers will rise. III.It will lose its absolute advantage.

The case study of wages and productivity in the textbook demonstrates That:

Assume that Germany and China can produce beer and cloth.If the MPLc/MPLb for Germany is 2/5 and MPLc/MPLb for China is 1, then Germany should:

With trade, a country will maximize its economic well­being when it:

Compared with constant cost production, if production occurs under Increasing cost conditions, it is MORE likely that countries will:

Production possibilities frontiers in the Ricardian model:

A nation will gain from trade if it:

Assume the MPLc = 2 cars and the MPLb = 5 boats.There are 150 Workers in this hypothetical economy.What is the maximum number of Boats that can be produced?

If the maximum number of units of cloth produced is 300 and the Maximum number of units of corn produced is 600, then with a MPLcloth = 2, what is the number of workers in the economy?

If a country has a comparative advantage in producing rice and a comparative disadvantage in producing pencils, does the Ricardian model predict that the real wage in rice production will fall and the real wage in pencil production will rise as a result of international trade?

It is possible to determine how much a nation will export over and above Its domestic consumption at various international prices, other things Being equal, by finding a set of equilibria.This schedule is:

Ricardo's theory made a number of assumptions, including which of the Following?

Suppose that the U.S.price index for its imports rose from 100 to 120 From 2010 to 2011 and the price index for its exports remained Unchanged.Which of the following statements is CORRECT?

The Global Economy

Gains and Losses From Trade in the Specific-Factors 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

With trade, a country will maximize its economic wellbeing when it: