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

Assume that Home is relatively abundant in labor and relatively scarce in land. The Heckscher-Ohlin model predicts that trade with other countries will cause increased returns to:

In autarky, wages generally:

A situation in which one nation produces good A using labor more intensively (relative to capital) than good B while a second nation produces good A, using capital more intensively (relative to labor) than good B is called:

Most trading nations do not completely specialize. Incomplete specialization is mainly due to:

United States' agricultural production is ________ in comparison with Chinese agricultural production.

(Table: Data on Suburbia) Use this table, which represents autarkic and free-trade production and consumption and resource use for Suburbia, to answer the following question. How many units of which product will Suburbia import?

If we measure scarcity or abundance correctly, we should use the concept of "effective factor endowment." This means:

Compared with other countries, the United States' effective factor endowment is greatest for:

(Figure: A Country's Before and After Trade Equilibria) How many computers will this nation export?

The United States and China, respectively, had 19.6% and 21.3% of the world's R&D scientists in 2013. Why then did the United States have 33.5% of the world's "effective" R&D scientists and China have 8.1% of the world's "effective" R&D scientists in 2013?

Who is likely to lose if the United States imposed restrictions on its imports from China?

(Figure: A Country's Before and After Trade Equilibria) How many computers will this nation import?

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. What is the most important reason why U.S. workers might oppose United States-Chile free trade?

The Heckscher-Ohlin theorem explains patterns of trade between countries using:

Which statement about the Heckscher-Ohlin model is correct?

(Figure: Home and Foreign Autarky Equilibria) According to the shapes of the two PPFs, which nation has a comparative advantage in the production of computers?

According to the Stolper-Samuelson theorem, international trade for a nation with a relative abundance of skilled labor and a relative scarcity of unskilled labor will tend to:

Consider two products: automobiles and shoes. If shoes are labor intensive and automobiles are capital intensive, what can we expect in free-trade conditions?