Exam 2: The Law of Comparative Advantage

Assume a Ricardian,constant-cost world.There are two countries,the United States and Canada.Each country can produce cameras and milk.The table below shows production per man-hour for each country. The United States has a labor force of 1,000 workers,and Canada has a labor force of 500 workers. a)Use this information to graph production possibilities frontiers for both countries.Put cameras on the horizontal axis. b)Assuming that a world price is established at which both countries can gain from trade,show possible consumption frontiers for each country.

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Question 1

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a)The United States PPF should have horizontal intercept (6000,0)and vertical intercept (0,1000).The Canadian PPF should have horizontal intercept (1000,0)and vertical intercept (0,1000).
b)The slope of the U.S.PPF is -1/6,and the slope of the Canadian PPF is -1.The U.S.has a comparative advantage in cameras,and Canada has a comparative advantage in milk.For mutually beneficial trade,a unit of milk must trade for between 1 camera and 1/6 camera.The consumption frontier for the U.S.must begin at the horizontal intercept and have a slope greater than -1/6,and Canada's consumption frontier must begin at the vertical intercept and have a slope less than -1.The slopes of the two consumption frontiers must be identical.

Which of the following statements is true?

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Question 2

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"The importance of being unimportant" refers to which of the following?

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Question 3

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With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input).The range of mutually beneficial trade between nation A and B is:

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Question 4

The Mercantilists believed in

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Question 5

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

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Question 6

Who was the first to test the theory of comparative advantage and what were to results?

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Question 7

Assume a Ricardian,constant-cost world.There are two countries,the United States and Canada.Each country can produce cameras and milk.The table below shows production per man-hour for each country. The United States has a labor force of 1,000 workers,and Canada has a labor force of 500 workers. a)Graph the world supply curve for cameras. b)Show a possible world demand curve and price (assuming that both countries completely specialize).

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Question 8

Assume that both the United States and Germany produce beef and computer chips with the following costs: a)What is the opportunity cost of beef (B)and computer chips (C)in each country? b)In which commodity does the United States have a comparative cost advantage? What about Germany? c)What is the range for mutually beneficial trade between the United States and Germany for each computer chip traded? d)How much would the United States and Germany gain if 1 unit of beef is exchanged for 3 chips?

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Question 9

A difference in relative commodity prices between two nations can be based upon a difference in:

(Multiple Choice)

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Question 10

The Ricardian trade model has been empirically

(Multiple Choice)

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Question 11

If in a two-nation (A and B),two-commodity (X and Y)world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

(Multiple Choice)

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Question 12

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

(Multiple Choice)

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Question 13

What proportion of international trade is based on absolute advantage?

(Multiple Choice)

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Question 14

In trade between a small and a large nation:

(Multiple Choice)

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Question 15

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

(Multiple Choice)

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Question 16

How can the production possibilities frontier be used to determine opportunity cost?

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Question 17

The first empirical test of the comparative advantage trade model was conducted by

(Multiple Choice)

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Question 18

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold ___ units of good _ for one unit of good ___

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Question 19

The Mercantilists did not advocate:

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Question 20

Showing 1 - 20 of 29

Which of the following statements is true?

"The importance of being unimportant" refers to which of the following?

With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input).The range of mutually beneficial trade between nation A and B is:

The Mercantilists believed in

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Who was the first to test the theory of comparative advantage and what were to results?

A difference in relative commodity prices between two nations can be based upon a difference in:

The Ricardian trade model has been empirically

If in a two-nation (A and B),two-commodity (X and Y)world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

What proportion of international trade is based on absolute advantage?

In trade between a small and a large nation:

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

How can the production possibilities frontier be used to determine opportunity cost?

The first empirical test of the comparative advantage trade model was conducted by

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold ___ units of good _ for one unit of good ___

The Mercantilists did not advocate:

Introduction

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

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Exam 2: The Law of Comparative Advantage

Which of the following statements is true?

"The importance of being unimportant" refers to which of the following?

With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input).The range of mutually beneficial trade between nation A and B is:

The Mercantilists believed in

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Who was the first to test the theory of comparative advantage and what were to results?

A difference in relative commodity prices between two nations can be based upon a difference in:

The Ricardian trade model has been empirically

If in a two-nation (A and B),two-commodity (X and Y)world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

What proportion of international trade is based on absolute advantage?

In trade between a small and a large nation:

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

How can the production possibilities frontier be used to determine opportunity cost?

The first empirical test of the comparative advantage trade model was conducted by

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold _____ units of good _____ for one unit of good _____

The Mercantilists did not advocate:

Introduction

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold ___ units of good _ for one unit of good ___