Question 1

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 2

Trade in a One-Factor World  
-Given the information in the table above, if the world equilibrium price of widgets were 40 cloths, then

Accepted Answer

A)  both countries could benefit from trade with each other. 
B)  neither country could benefit from trade with each other. 
C)  each country will want to export the good in which it enjoys comparative advantage. 
D)  neither country will want to export the good in which it enjoys comparative advantage. 
E)  both countries will want to specialize in cloth. 
A)  both countries could benefit from trade with each other. 
B)  neither country could benefit from trade with each other. 
C)  each country will want to export the good in which it enjoys comparative advantage. 
D)  neither country will want to export the good in which it enjoys comparative advantage. 
E)  both countries will want to specialize in cloth.

Question 3

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 4

In a two product two country world, international trade can lead to increases in

Accepted Answer

A)  consumer welfare only if output of both products is increased. 
B)  output of both products and consumer welfare in both countries. 
C)  total production of both products but not consumer welfare in both countries. 
D)  consumer welfare in both countries but not total production of both products. 
E)  prices of both goods in both countries. 
A)  consumer welfare only if output of both products is increased. 
B)  output of both products and consumer welfare in both countries. 
C)  total production of both products but not consumer welfare in both countries. 
D)  consumer welfare in both countries but not total production of both products. 
E)  prices of both goods in both countries.

Question 5

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 6

Many countries in sub-Saharan Africa have very low labor productivities in many sectors, for example in manufacturing and agriculture. They often despair of even trying to attempt to build their industries unless it is done in an autarkic context, behind protectionist walls because they do not believe they can compete with more productive industries abroad. Discuss this issue in the context of the Ricardian model of comparative advantage.

Accepted Answer

The Ricardian model of comparative advan

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

Trade in a One-Factor World -Given the information in the table above, if the world equilibrium price of widgets were 40 cloths, then

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

In a two product two country world, international trade can lead to increases in

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

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

Filters

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

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

Trade in a One-Factor World -Given the information in the table above, if the world equilibrium price of widgets were 40 cloths, then

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

In a two product two country world, international trade can lead to increases in

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

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

Filters