Question 1

According to Ricardo, a country will have a comparative advantage in the product in which its

Accepted Answer

A)  labor productivity is relatively low. 
B)  labor productivity is relatively high. 
C)  labor mobility is relatively low. 
D)  labor mobility is relatively high. 
E)  labor is outsourced to neighboring countries. 
A)  labor productivity is relatively low. 
B)  labor productivity is relatively high. 
C)  labor mobility is relatively low. 
D)  labor mobility is relatively high. 
E)  labor is outsourced to neighboring countries.

Question 2

The earliest statement of the principle of comparative advantage is associated with

Accepted Answer

A)  David Hume. 
B)  David Ricardo. 
C)  Adam Smith. 
D)  Eli Heckscher. 
E)  Bertil Ohlin. 
A)  David Hume. 
B)  David Ricardo. 
C)  Adam Smith. 
D)  Eli Heckscher. 
E)  Bertil Ohlin.

Question 3

Use the information in the table below to answer the following questions.
   
(a) Does either country have an absolute advantage in the production of wheat or beef?
 Explain.
(b) What is the opportunity cost of wheat in each country?
(c) What is the opportunity cost of beef in each country?
(d) Analyze comparative advantage and opportunities for trade between the U.S. and Argentina.

Accepted Answer

(a) Argentina has an absolute advantage

Question 4

The two-country, multi-product model differs from the two-country, two-product model in that, in the former

Accepted Answer

A)  the relative wage ratio will determine the pattern of trade ( which good is exported by which country). 
B)  which country will export which product is determined entirely by labor productivity data. 
C)  full specialization is likely to hold in equilibrium. 
D)  none of the goods are potentially nontraded. 
E)  domestic relative prices are not relevant. 
A)  the relative wage ratio will determine the pattern of trade ( which good is exported by which country). 
B)  which country will export which product is determined entirely by labor productivity data. 
C)  full specialization is likely to hold in equilibrium. 
D)  none of the goods are potentially nontraded. 
E)  domestic relative prices are not relevant.

Question 5

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to

Accepted Answer

A)  France having a comparative advantage over Germany in ships. 
B)  France having a comparative disadvantage compared to Germany in autos and ships. 
C)  Germany having a comparative advantage over France in autos and ships. 
D)  France having no comparative advantage over Germany. 
E)  France should produce autos. 
A)  France having a comparative advantage over Germany in ships. 
B)  France having a comparative disadvantage compared to Germany in autos and ships. 
C)  Germany having a comparative advantage over France in autos and ships. 
D)  France having no comparative advantage over Germany. 
E)  France should produce autos.

Question 6

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 7

Use the information in the table below to answer the following questions.
   
(a) Does either country have an absolute advantage in the production of wheat or beef?
 Explain.
(b) What is the opportunity cost of wheat in each country?
(c) What is the opportunity cost of beef in each country?
(d) Analyze comparative advantage and opportunities for trade between the U.S. and Argentina.

Accepted Answer

(a) The U.S. has an absolute advantage i

According to Ricardo, a country will have a comparative advantage in the product in which its

The earliest statement of the principle of comparative advantage is associated with

The two-country, multi-product model differs from the two-country, two-product model in that, in the former

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to

Given the information in the table above

Introduction

World Trade: an Overview

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

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

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

According to Ricardo, a country will have a comparative advantage in the product in which its

The earliest statement of the principle of comparative advantage is associated with

The two-country, multi-product model differs from the two-country, two-product model in that, in the former

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to

Given the information in the table above

Introduction

World Trade: an Overview

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

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters