Exam 4: Trade and Resources: the Heckscher-Ohlin Model

(Figure: Home and Foreign Autarky Equilibria) Which line in the graph represents Foreign's relative price of computers in terms of shoes?

Chile and the United States use capital and labor to produce wheat and automobiles. The United States is capital abundant, and Chile is labor abundant. Wheat production is more labor intensive than automobile production. According to the Stolper-Samuelson theorem:

Canada and the United States produce computers and chemicals using labor and capital as the only inputs in production. The United States is capital abundant, and Canada is labor abundant. Computer production is more labor intensive than chemical production in both countries. What does the Heckscher-Ohlin model predict will happen to wages and returns to capital after trade takes place between Canada and the United States?

The Heckscher-Ohlin model of international trade uses _____ and ______ to explain trade patterns.

Surveys have found that U.S. ____________ are the strongest proponents of placing limits on imports.

(Table: Factor Use in Latvian Trade) Does Latvia import capital-intensive or labor-intensive products?

Suppose that country 1 is capital abundant relative to country 2. Both produce two goods (X and Y). Factor-intensity reversal occurs whenever:

(Figure: A Country's Before and After Trade Equilibria) If the new international relative price of computers increases from its pre-trade position, how will the slope of the price line change in the graph?

The implication of resources being mobile domestically is that:

(Figure: A Country's Before and After Trade Equilibria) Using the graph, how can you decide whether the nation has "gained" from trade and has a higher standard of living?

(Table: Capital Intensity Across Industries) According to the table, which industry is the most labor intensive?

France and Italy only trade with each other. Each produces wine and bread. The production of bread is relatively capital intensive, and the production of wine is relatively labor intensive. France is relatively abundant in capital, while Italy is relatively abundant in labor. According to the Heckscher-Ohlin model, free trade between Italy and France should cause:

The Heckscher-Ohlin model assumes that there are two countries, each of which produces two goods (say manufactures and agriculture) using labor and capital. Which of the following is an additional assumption of the Heckscher-Ohlin model?

(Figure: A Country's Before and After Trade Equilibria) Suppose that the new international relative price of computers increases from the pre-trade price. If we then subtract the number of shoes produced domestically at the new international price from the number of shoes consumed at this price, we will get one point on ____________ for shoes.

Leontief discovered a "paradox" in his test of the Heckscher-Ohlin model for the United States. He expected the United States to export _____-intensive goods and import _____-intensive goods; but his study indicated the reverse was true.

The PPF of a country will be skewed toward the good that:

Suppose that Home is a capital-abundant country. When Home trades with Foreign, a labor-abundant country, the Heckscher-Ohlin model predicts that the price of:

If the wage-rental ratio in Japanese auto production is lower than the wage-rental ratio in U.S. auto production, then:

A long-run model of trade basic to the determination of how mobile factors of production affect national welfare and the returns to the factors is known as:

Suppose Portugal has 700 workers and 26,000 units of capital, and France has 18,000 workers and 700 units of capital. Technology is identical in both countries. Assume that wine is the capital-intensive good and cloth is the labor-intensive good. Which one of the following statements is correct?