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

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It is generally claimed that state trading, or centrally controlled trading will tend to reach a lower economic welfare than would be reached by allowing market forces to determine trade flow directions and terms of trade. Illustrate a counter-example to this proposition.

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Question 61

Given the information in the table above, if wages were to double in Home, then Home should

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Question 62

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

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Question 63

In a two country and two product Ricardian model, a small country is likely to benefit more than the large country because

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Question 64

If two countries have identical production possibility frontiers, then trade between them is likely to be beneficial if

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Question 65

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.

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Question 66

Given the information in the table above, if the world equilibrium price of widgets were 40 cloths, then

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Question 67

When compared with China, the growth of clothing exports originating in Bangladesh clearly illustrates the difference between absolute and comparative advantage. Discuss and explain.

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Question 68

An examination of the Ricardian model of comparative advantage yields the clear result that trade is (potentially) beneficial for each of the two trading partners since it allows for an expanded consumption choice for each. However, for the world as a whole the expansion of production of one product must involve a decrease in the availability of the other, so that it is not clear that trade is better for the world as a whole as compared to an initial situation of non-trade (but efficient production in each country). Are there in fact gains from trade for the world as a whole? Explain.

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Question 69

If labor productivities were exactly proportional to wage levels internationally, this would

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Question 70

Showing 61 - 70 of 70

It is generally claimed that state trading, or centrally controlled trading will tend to reach a lower economic welfare than would be reached by allowing market forces to determine trade flow directions and terms of trade. Illustrate a counter-example to this proposition.

Given the information in the table above, if wages were to double in Home, then Home should

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

In a two country and two product Ricardian model, a small country is likely to benefit more than the large country because

If two countries have identical production possibility frontiers, then trade between them is likely to be beneficial if

Given the information in the table above, if the world equilibrium price of widgets were 40 cloths, then

When compared with China, the growth of clothing exports originating in Bangladesh clearly illustrates the difference between absolute and comparative advantage. Discuss and explain.

If labor productivities were exactly proportional to wage levels internationally, this would

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

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