Question 1

As a result of trade, specialization in the Ricardian model tends to be

Accepted Answer

A)  complete with constant costs and with increasing costs. 
B)  complete with constant costs and incomplete with increasing costs. 
C)  incomplete with constant costs and complete with increasing costs. 
D)  incomplete with constant costs and incomplete with increasing costs. 
E)  dependent on the specific opportunity costs involved in production. 
A)  complete with constant costs and with increasing costs. 
B)  complete with constant costs and incomplete with increasing costs. 
C)  incomplete with constant costs and complete with increasing costs. 
D)  incomplete with constant costs and incomplete with increasing costs. 
E)  dependent on the specific opportunity costs involved in production.

Question 2

In the Ricardian model, comparative advantage is likely to be due to

Accepted Answer

A)  scale economies. 
B)  home product taste bias. 
C)  greater capital availability per worker. 
D)  labor productivity differences. 
E)  political pressure. 
A)  scale economies. 
B)  home product taste bias. 
C)  greater capital availability per worker. 
D)  labor productivity differences. 
E)  political pressure.

Question 3

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

Question 4

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

Question 5

If the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis, we know that

Accepted Answer

A)  the United States has no comparative advantage 
B)  Germany has a comparative advantage in butter. 
C)  the U.S. has a comparative advantage in butter. 
D)  Germany has comparative advantages in both products. 
E)  the U.S. has a comparative disadvantage in widgets. 
A)  the United States has no comparative advantage 
B)  Germany has a comparative advantage in butter. 
C)  the U.S. has a comparative advantage in butter. 
D)  Germany has comparative advantages in both products. 
E)  the U.S. has a comparative disadvantage in widgets.

Question 6

We know that in antiquity, China exported silk because no one in any other country knew how to produce this product. From this information we know that

Accepted Answer

A)  China had a comparative advantage in silk. 
B)  China had an absolute advantage, but not a comparative advantage in silk. 
C)  no comparative advantage could exist because the technology was not diffused. 
D)  China exported silk for political reasons even though it had no comparative advantage. 
E)  China was unable to profit by exporting silk because it was unknown in the rest of the world. 
A)  China had a comparative advantage in silk. 
B)  China had an absolute advantage, but not a comparative advantage in silk. 
C)  no comparative advantage could exist because the technology was not diffused. 
D)  China exported silk for political reasons even though it had no comparative advantage. 
E)  China was unable to profit by exporting silk because it was unknown in the rest of the world.

Question 7

-Given the information in the table above, if it is ascertained that Foreign uses prison-slave labor to produce its exports, then home should

Accepted Answer

A)  export cloth. 
B)  export widgets. 
C)  export both and import nothing. 
D)  export and import nothing. 
E)  export widgets and import cloth. 
A)  export cloth. 
B)  export widgets. 
C)  export both and import nothing. 
D)  export and import nothing. 
E)  export widgets and import cloth.

Question 8

It is generally claimed that a movement from autarky to free trade consistent with Ricardian comparative advantage increases the economic welfare of each of the trade partners. However, it may be demonstrated that under certain circumstances, not everyone in each country is made better off. Illustrate such a case.

Accepted Answer

(a) If inter-generational, or economic g

Question 9

In 1975, wage levels in South Korea were roughly 5% of those in the United States. It is obvious that if the United States had allowed Korean goods to be freely imported into the United States at that time, this would have caused devastation to the standard of living in the United States, because no producer in this country could possibly compete with such low wages. Discuss this assertion in the context of the Ricardian model of comparative advantage.

Accepted Answer

Regardless of relative wage levels, the

Question 10

A nation engaging in trade according to the Ricardian model will find its consumption bundle

Accepted Answer

A)  inside its production possibilities frontier. 
B)  on its production possibilities frontier. 
C)  outside its production possibilities frontier. 
D)  inside its trade-partner's production possibilities frontier. 
E)  on its trade-partner's production possibilities frontier. 
A)  inside its production possibilities frontier. 
B)  on its production possibilities frontier. 
C)  outside its production possibilities frontier. 
D)  inside its trade-partner's production possibilities frontier. 
E)  on its trade-partner's production possibilities frontier.

Question 11

Given the information in the table above, Foreign's opportunity cost of widgets is

Accepted Answer

A)  0.5. 
B)  2.0. 
C)  6.0. 
D)  1.5. 
E)  3.0. 
A)  0.5. 
B)  2.0. 
C)  6.0. 
D)  1.5. 
E)  3.0.

Question 12

-Given the information in the table above. What is the opportunity cost of Cloth in terms of Widgets in Foreign?

Accepted Answer

The answer of  
-Given the information in the table...

Question 13

How does the two-good, two-country version of the Ricardian model differ from the two-country, many-good model in terms of the determination which goods are produced and exported by each country?

Accepted Answer

In the two-good-two-country version of t

Question 14

Given the information in the table above, if the world equilibrium price of widgets were 4 cloth, 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 15

The growth of clothing exports originating in Bangladesh is the result of the

Accepted Answer

A)  high productivity of workers in Bangladesh. 
B)  low wages in Bangladesh. 
C)  low productivity of workers in other countries. 
D)  low productivity of workers in Bangladesh in industries other than those that produce clothing for export. 
E)  high wages in other countries. 
A)  high productivity of workers in Bangladesh. 
B)  low wages in Bangladesh. 
C)  low productivity of workers in other countries. 
D)  low productivity of workers in Bangladesh in industries other than those that produce clothing for export. 
E)  high wages in other countries.

Question 16

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Accepted Answer

A)  is producing exports indirectly more efficiently than it could alternatively. 
B)  is producing imports indirectly more efficiently than it could domestically. 
C)  is producing exports using fewer labor units. 
D)  is producing imports indirectly using fewer labor units. 
E)  is producing exports while outsourcing services. 
A)  is producing exports indirectly more efficiently than it could alternatively. 
B)  is producing imports indirectly more efficiently than it could domestically. 
C)  is producing exports using fewer labor units. 
D)  is producing imports indirectly using fewer labor units. 
E)  is producing exports while outsourcing services.

Question 17

Suppose the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German mark sharply depreciates against the U.S. dollar. We now know that

Accepted Answer

A)  the United States has no comparative advantage 
B)  Germany has a comparative advantage in butter. 
C)  the United States has a comparative advantage in butter. 
D)  Germany has a comparative advantage in widgets. 
E)  Germany has lost its comparative advantage. 
A)  the United States has no comparative advantage 
B)  Germany has a comparative advantage in butter. 
C)  the United States has a comparative advantage in butter. 
D)  Germany has a comparative advantage in widgets. 
E)  Germany has lost its comparative advantage.

Question 18

The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to

Accepted Answer

A)  differences in technology. 
B)  differences in preferences. 
C)  differences in labor productivity. 
D)  differences in resources. 
E)  gravity relationships among countries. 
A)  differences in technology. 
B)  differences in preferences. 
C)  differences in labor productivity. 
D)  differences in resources. 
E)  gravity relationships among countries.

Question 19

When compared with China, the growth of clothing exports originating in Bangladesh is the result of

Accepted Answer

A)  the comparative advantage that Bangladesh has in the production of clothing for export. 
B)  the absolute advantage that China has in the production of clothing for export. 
C)  the absolute advantage that Bangladesh has in the production of clothing for export. 
D)  the comparative and absolute advantage that China has in the production of clothing for export. 
E)  the comparative and absolute advantage that Bangladesh has in the production of clothing for export. 
A)  the comparative advantage that Bangladesh has in the production of clothing for export. 
B)  the absolute advantage that China has in the production of clothing for export. 
C)  the absolute advantage that Bangladesh has in the production of clothing for export. 
D)  the comparative and absolute advantage that China has in the production of clothing for export. 
E)  the comparative and absolute advantage that Bangladesh has in the production of clothing for export.

Question 20

The evidence cited in the chapter using the examples of the East Asia New Industrializing Countries suggests that as international productivities converge, so do international wage levels. Why do you suppose this happened for the East Asian NICs? In light of your answer, what do you think is likely to happen to the relative wages (relative to those in the United States) of China in the coming decade? Explain your reasoning.

Accepted Answer

Following the logic of the Ricardian mod

As a result of trade, specialization in the Ricardian model tends to be

In the Ricardian model, comparative advantage is likely to be due to

If the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis, we know that

We know that in antiquity, China exported silk because no one in any other country knew how to produce this product. From this information we know that

-Given the information in the table above, if it is ascertained that Foreign uses prison-slave labor to produce its exports, then home should

A nation engaging in trade according to the Ricardian model will find its consumption bundle

Given the information in the table above, Foreign's opportunity cost of widgets is

-Given the information in the table above. What is the opportunity cost of Cloth in terms of Widgets in Foreign?

How does the two-good, two-country version of the Ricardian model differ from the two-country, many-good model in terms of the determination which goods are produced and exported by each country?

Given the information in the table above, if the world equilibrium price of widgets were 4 cloth, then

The growth of clothing exports originating in Bangladesh is the result of the

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Suppose the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German mark sharply depreciates against the U.S. dollar. We now know that

The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to

When compared with China, the growth of clothing exports originating in Bangladesh is the result of

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

As a result of trade, specialization in the Ricardian model tends to be

In the Ricardian model, comparative advantage is likely to be due to

If the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis, we know that

We know that in antiquity, China exported silk because no one in any other country knew how to produce this product. From this information we know that

-Given the information in the table above, if it is ascertained that Foreign uses prison-slave labor to produce its exports, then home should

A nation engaging in trade according to the Ricardian model will find its consumption bundle

Given the information in the table above, Foreign's opportunity cost of widgets is

-Given the information in the table above. What is the opportunity cost of Cloth in terms of Widgets in Foreign?

How does the two-good, two-country version of the Ricardian model differ from the two-country, many-good model in terms of the determination which goods are produced and exported by each country?

Given the information in the table above, if the world equilibrium price of widgets were 4 cloth, then

The growth of clothing exports originating in Bangladesh is the result of the

A country engaging in trade according to the principles of comparative advantage gains from trade because it

Suppose the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German mark sharply depreciates against the U.S. dollar. We now know that

The Ricardian model attributes the gains from trade associated with the principle of comparative advantage result to

When compared with China, the growth of clothing exports originating in Bangladesh is the result of

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