Exam 2: Foundations of Modern Trade Theory: Comparative Advantage

Assume that the United States and Canada engage in trade.If the international terms of trade coincides with the Canadian cost ratio,the United States realizes all of the gains from trade with Canada.

Table 2.1. Output Possibilities of the U.S. and the U.K. -Refer to Table 2.1.Mutually advantageous trade will occur between the United States and the United Kingdom so long as one ton of steel trades for:

Modern trade theory recognizes that the pattern of world trade is governed by both demand conditions and supply conditions.

The theory of reciprocal demand does not well apply when one country:

The gains from international trade increase as:

The equilibrium prices and quantities established after trade are fully determinate if we know:

Figure 2.2 illustrates trade data for Canada. The figure assumes that Canada attains international trade equilibrium at point C. Figure 2.2. Canadian Trade Possibilities -Referring to Figure 2.2,Canada has a comparative advantage in:

For the commodity terms of trade to improve,a country's import price index must rise relative to its export price index over a given time period.

If Japan and France have identical production possibilities curves and identical community indifference curves:

The domestic cost ratios of nations set the outer limits to the equilibrium terms of trade.

Table 2.1. Output Possibilities of the U.S. and the U.K. -Refer to Table 2.1.If trade opens up between the United States and the United Kingdom,American firms should specialize in producing:

Trade between two nations would not be possible if they have:

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

If Canada experiences increasing opportunity costs,its supply schedule of steel will be:

Figure 2.2 illustrates trade data for Canada. The figure assumes that Canada attains international trade equilibrium at point C. Figure 2.2. Canadian Trade Possibilities -According to Figure 2.2,imports for Canada total:

Who gains more from trade,when nations are of unequal economic size?

The writings of G.MacDougall emphasized which of the following as an explanation of a country's competitive position?

According to the principle of comparative advantage,an open trading system results in resources being channeled from uses of low productivity to those of high productivity.

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

The Ricardian theory of comparative advantage assumes only two nations and two products,labor can move freely within a nation,and perfect competition exists in all markets.