Question 1

If the world terms of trade equal those of country F,then

Accepted Answer

A)  country H but not country F will gain from trade. 
B)  country H and country F will both gain from trade. 
C)  neither country H nor F will gain from trade. 
D)  only the country whose government subsidizes its exports will gain. 
E)  country F but not country H will gain from trade. 
A)  country H but not country F will gain from trade. 
B)  country H and country F will both gain from trade. 
C)  neither country H nor F will gain from trade. 
D)  only the country whose government subsidizes its exports will gain. 
E)  country F but not country H will gain from trade.

Question 2

Trade in a One-Factor World
  
-Given the information in the table above

Accepted Answer

A)  neither country has a comparative advantage in cloth. 
B)  Home has a comparative advantage in cloth. 
C)  Foreign has a comparative advantage in cloth. 
D)  Home has a comparative advantage in both cloth and widgets. 
E)  neither country has a comparative advantage in widgets. 
A)  neither country has a comparative advantage in cloth. 
B)  Home has a comparative advantage in cloth. 
C)  Foreign has a comparative advantage in cloth. 
D)  Home has a comparative advantage in both cloth and widgets. 
E)  neither country has a comparative advantage in widgets.

Question 3

The evidence cited in the chapter using the examples of the East Asia New Industrializing Countries suggests that as international productivities converge,so do international wage levels.Why do you suppose this happened for the East Asian NICs? In light of your answer,what do you think is likely to happen to the relative wages (relative to those in the United States)of China in the coming decade? Explain your reasoning.

Accepted Answer

Following the logic of the Ricardian mod

Question 4

The growth of clothing exports originating in Bangladesh is the result of the

Accepted Answer

A)  high productivity of workers in Bangladesh. 
B)  low wages in Bangladesh. 
C)  low productivity of workers in other countries. 
D)  low productivity of workers in Bangladesh in industries other than those that produce clothing for export. 
E)  high wages in other countries. 
A)  high productivity of workers in Bangladesh. 
B)  low wages in Bangladesh. 
C)  low productivity of workers in other countries. 
D)  low productivity of workers in Bangladesh in industries other than those that produce clothing for export. 
E)  high wages in other countries.

Question 5

If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios),then if they both use the same currency

Accepted Answer

A)  neither country has a comparative advantage. 
B)  only the low wage country has a comparative advantage. 
C)  only the high wage country has a comparative advantage. 
D)  consumers will still find trade worth while from their perspective. 
E)  it is possible that both will enjoy the conventional gains from trade. 
A)  neither country has a comparative advantage. 
B)  only the low wage country has a comparative advantage. 
C)  only the high wage country has a comparative advantage. 
D)  consumers will still find trade worth while from their perspective. 
E)  it is possible that both will enjoy the conventional gains from trade.

Question 6

Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan if

Accepted Answer

A)  U.S. labor productivity equaled 40 units per hour and Japan's 15 units per hour. 
B)  U.S. labor productivity equaled 30 units per hour and Japan's 20 units per hour. 
C)  U.S. labor productivity equaled 20 units per hour and Japan's 30 units per hour. 
D)  U.S. labor productivity equaled 15 units per hour and Japan's 25 units per hour. 
E)  U.S. labor productivity equaled 15 units per hour and Japan's 40 units per hour. 
A)  U.S. labor productivity equaled 40 units per hour and Japan's 15 units per hour. 
B)  U.S. labor productivity equaled 30 units per hour and Japan's 20 units per hour. 
C)  U.S. labor productivity equaled 20 units per hour and Japan's 30 units per hour. 
D)  U.S. labor productivity equaled 15 units per hour and Japan's 25 units per hour. 
E)  U.S. labor productivity equaled 15 units per hour and Japan's 40 units per hour.

Question 7

In a two country and two product Ricardian model,a small country is likely to benefit more than the large country because

Accepted Answer

A)  the large country will wield greater political power, and hence will not yield to market signals. 
B)  the small country is less likely to trade at price equal or close to its autarkic (domestic) relative prices. 
C)  the small country is more likely to fully specialize. 
D)  the small country is less likely to fully specialize. 
E)  the small country can raise wages. 
A)  the large country will wield greater political power, and hence will not yield to market signals. 
B)  the small country is less likely to trade at price equal or close to its autarkic (domestic) relative prices. 
C)  the small country is more likely to fully specialize. 
D)  the small country is less likely to fully specialize. 
E)  the small country can raise wages.

Question 8

The Country of Rhozundia is blessed with rich copper deposits.The cost of copper produced (relative to the cost of widgets produced)is therefore very low.From this information we know that

Accepted Answer

A)  Rhozundia has a comparative advantage in copper. 
B)  Rhozundia should import copper and export widgets. 
C)  Rhozundia should export both widgets and copper. 
D)  Rhozundia should invest in more in widget production. 
E)  Rhozundia may or may not have a comparative advantage in copper. 
A)  Rhozundia has a comparative advantage in copper. 
B)  Rhozundia should import copper and export widgets. 
C)  Rhozundia should export both widgets and copper. 
D)  Rhozundia should invest in more in widget production. 
E)  Rhozundia may or may not have a comparative advantage in copper.

Question 9

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Accepted Answer

A)  is producing exports indirectly more efficiently than it could alternatively. 
B)  is producing imports indirectly more efficiently than it could domestically. 
C)  is producing exports using fewer labor units. 
D)  is producing imports indirectly using fewer labor units. 
E)  is producing exports while outsourcing services. 
A)  is producing exports indirectly more efficiently than it could alternatively. 
B)  is producing imports indirectly more efficiently than it could domestically. 
C)  is producing exports using fewer labor units. 
D)  is producing imports indirectly using fewer labor units. 
E)  is producing exports while outsourcing services.

Question 10

It is generally claimed that a movement from autarky to free trade consistent with Ricardian comparative advantage increases the economic welfare of each of the trade partners.However,it may be demonstrated that under certain circumstances,not everyone in each country is made better off.Illustrate such a case.

Accepted Answer

(a)If inter-generational,or economic gro

If the world terms of trade equal those of country F,then

Trade in a One-Factor World -Given the information in the table above

The growth of clothing exports originating in Bangladesh is the result of the

If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios),then if they both use the same currency

Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan if

In a two country and two product Ricardian model,a small country is likely to benefit more than the large country because

The Country of Rhozundia is blessed with rich copper deposits.The cost of copper produced (relative to the cost of widgets produced)is therefore very low.From this information we know that

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Introduction

National Income Accounting and the Balance of Payments

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,Outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

Filters

Exam 3: Labor Productivity and Comparative Advantage: The Ricardian Model

If the world terms of trade equal those of country F,then

Trade in a One-Factor World -Given the information in the table above

The growth of clothing exports originating in Bangladesh is the result of the

If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios),then if they both use the same currency

Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour.Production costs would be lower in the United States as compared to Japan if

In a two country and two product Ricardian model,a small country is likely to benefit more than the large country because

The Country of Rhozundia is blessed with rich copper deposits.The cost of copper produced (relative to the cost of widgets produced)is therefore very low.From this information we know that

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Introduction

National Income Accounting and the Balance of Payments

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,Outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

Filters