If wage in country A is $6/hour and in country B is £2/hour,and the exchange rate between a $ and a £ is 1£=2$,then given the information in the table,which of the following is true? $\begin{array}{|l|c|c|} \hline & \text {Country A} &\text { Country B} \\ \hline\text { Apple (bushels/hr) }& 8 & 1 \\ \hline\text { Orange (bushels/hr)} & 2 & 3 \\ \hline \end{array}$

A) Country A has comparative advantage in apples B) Country A has comparative advantage in oranges C) Country B has comparative advantage in apples D) Country A and B both have comparative advantage in oranges A) Country A has comparative advantage in apples B) Country A has comparative advantage in oranges C) Country B has comparative advantage in apples D) Country A and B both have comparative advantage in oranges

According to the following table,if the US trades 9 bushels of wheat to the UK for 8 yards of cloth,the UK gains from trade equal: $\begin{array}{|l|c|c|} \hline &\text { U.S. }&\text { U.K.} \\ \hline \text {Wheat (bushels/hr) }& 9 & 3 \\ \hline\text { Cloth (yards/hr) }& 5 & 4 \\ \hline \end{array}$

A) 4 bushels of wheat B) 3 yards of cloth C) 4 yards of cloth D) 3 bushels of wheat A) 4 bushels of wheat B) 3 yards of cloth C) 4 yards of cloth D) 3 bushels of wheat

According to the table below,the opportunity cost of one unit of rice for the UK is equal to: Production Possibility Schedule for Rice and Pudding in the United States and the United Kingdom $\begin{array}{|cc|cc|} \hline \text { United States } &&\text {United Kingdom } \\ \hline \text {Rice} & \text {Pudding} &\text { Rice }& \text {Pudding} \\ \hline 140 & 0 & 35 & 0 \\ \hline 120 & 10 & 30 & 10 \\ \hline 100 & 20 & 25 & 20 \\ \hline 80 & 30 & 20 & 30 \\ \hline 60 & 40 & 15 & 40 \\ \hline 40 & 50 & 10 & 50 \\ \hline 20 & 60 & 5 & 60 \\ \hline 0 & 70 & 0 & 70 \\ \hline \end{array}$

A) 1/2 units of pudding B) 5 units of pudding C) 10 units of pudding D) 2 units of pudding A) 1/2 units of pudding B) 5 units of pudding C) 10 units of pudding D) 2 units of pudding

Exam 2: Comparative Advantage

According to the law of comparative advantage,the less efficient of the two trading countries should specialize in and export the commodity in which it manages to have an absolute advantage.

(True/False)

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Question 21

If wage in country A is $6/hour and in country B is £2/hour,and the exchange rate between a $ and a £ is 1£=2$,then given the information in the table,which of the following is true? Country A Country B Apple (bushels/hr) 8 1 Orange (bushels/hr) 2 3

(Multiple Choice)

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Question 22

An important exception to the Laissez-faire policy mentioned by the author is in:

(Multiple Choice)

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Question 23

In the table below both countries produce at the bold levels of output without trade.Assume the US and UK initiate trade and begin to completely specialize in the commodity in which they have a comparative advantage.Identify the gains from trade if the US trades 50 units of rice to the UK for 50 units of pudding. Production Possibility Schedule for Rice and Pudding in the United States and the United Kingdom United States United Kingdom Rice Pudding Rice Pudding 140 0 35 0 120 10 30 10 100 20 25 20 80 30 20 60 60 40 15 80 40 50 10 100 20 60 5 120 0 70 0 140

(Multiple Choice)

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Question 24

The Wealth of Nations was published in 1776 by:

(Multiple Choice)

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Question 25

Which of these economists considered absolute advantage in production to be the basis for trade between nations?

(Multiple Choice)

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Question 26

Commodities exported and imported by each nation constitute the:

(Multiple Choice)

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Question 27

Merchants,bankers,and government officials from Spain,France,and Portugal outline the principles and ideas of mercantilism in the publication The Wealth of Nations.

(True/False)

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Question 28

The ratio of one commodity price to the price of another commodity is called (the):

(Multiple Choice)

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Question 29

According to the following table,if the US trades 9 bushels of wheat to the UK for 8 yards of cloth,the UK gains from trade equal: U.S. U.K. Wheat (bushels/hr) 9 3 Cloth (yards/hr) 5 4

(Multiple Choice)

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Question 30

According to opportunity cost theory,the cost or price of a commodity is determined by,or can be inferred exclusively from,its labor content.

(True/False)

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Question 31

From 1815 to1914,the United States was the only Western nation that was completely free of mercantilist ideas.

(True/False)

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Question 32

The mercantilists measure the wealth of a nation by its stock of:

(Multiple Choice)

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Question 33

______________ states that the cost or price of a commodity is determined by,or can be inferred exclusively from,its labor content.

(Multiple Choice)

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Question 34

Adam Smith strongly advocated a policy of laissez-faire.

(True/False)

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Question 35

Among the following 4,which one do you think is the most powerful trade theories?

(Multiple Choice)

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Question 36

According to mercantilism,the flow of _____________ would settle the export surplus that results from trade.

(Multiple Choice)

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Question 37

When the amount of a commodity that must be given up to produce each additional unit of another commodity,regardless of the amount of the commodity foregone,is the same at every level of production,which of the following exists?

(Multiple Choice)

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Question 38

According to the table below,the opportunity cost of one unit of rice for the UK is equal to: Production Possibility Schedule for Rice and Pudding in the United States and the United Kingdom United States United Kingdom Rice Pudding Rice Pudding 140 0 35 0 120 10 30 10 100 20 25 20 80 30 20 30 60 40 15 40 40 50 10 50 20 60 5 60 0 70 0 70

(Multiple Choice)

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Question 39

The theory of absolute advantage was how Adam Smith explained basis for trade between nations.

(True/False)

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Question 40

According to the law of comparative advantage,the less efficient of the two trading countries should specialize in and export the commodity in which it manages to have an absolute advantage.

If wage in country A is $6/hour and in country B is £2/hour,and the exchange rate between a $ and a £ is 1£=2$,then given the information in the table,which of the following is true? Country A Country B Apple (bushels/hr) 8 1 Orange (bushels/hr) 2 3

An important exception to the Laissez-faire policy mentioned by the author is in:

The Wealth of Nations was published in 1776 by:

Which of these economists considered absolute advantage in production to be the basis for trade between nations?

Commodities exported and imported by each nation constitute the:

Merchants,bankers,and government officials from Spain,France,and Portugal outline the principles and ideas of mercantilism in the publication The Wealth of Nations.

The ratio of one commodity price to the price of another commodity is called (the):

According to the following table,if the US trades 9 bushels of wheat to the UK for 8 yards of cloth,the UK gains from trade equal: U.S. U.K. Wheat (bushels/hr) 9 3 Cloth (yards/hr) 5 4

According to opportunity cost theory,the cost or price of a commodity is determined by,or can be inferred exclusively from,its labor content.

From 1815 to1914,the United States was the only Western nation that was completely free of mercantilist ideas.

The mercantilists measure the wealth of a nation by its stock of:

______________ states that the cost or price of a commodity is determined by,or can be inferred exclusively from,its labor content.

Adam Smith strongly advocated a policy of laissez-faire.

Among the following 4,which one do you think is the most powerful trade theories?

According to mercantilism,the flow of _____________ would settle the export surplus that results from trade.

When the amount of a commodity that must be given up to produce each additional unit of another commodity,regardless of the amount of the commodity foregone,is the same at every level of production,which of the following exists?

The theory of absolute advantage was how Adam Smith explained basis for trade between nations.

Introduction to the Global Economy

The Standard Trade Model

The Heckscher-Ohlin and Other Trade Theories

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the Political Economy of Protectionism

Economic Integration

Growth and Development With International Trade

International Resource Movements and Multinational Corporations

Balance of Payments

The Foreign Exchange Market and Exchange Rates

Exchange Rate Determination

Automatic Adjustments With Flexible and Fixed Exchange Rates

Adjustment Policies

Flexible Versus Fixed Exchange Rates,european Monetary Systems,and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future

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