Question 1

The pauper labor and the exploitation arguments

Accepted Answer

A) invalidate the Ricardian model. 
B) are theoretical weaknesses that limit the applicability of the Ricardian concept of comparative advantage. 
C) are theoretically irrelevant to the Ricardian model,and do not limit its logical relevance. 
D) are not relevant because the Ricardian model allows for different technologies in different countries. 
E) are not relevant because the Ricardian model is based on the labor theory of value.

Question 2

Trade between two countries can benefit both countries if

Accepted Answer

A) each country has a more elastic supply for the exported goods. 
B) each country produces a wide range of goods for export. 
C) each country exports that good in which it has a comparative advantage. 
D) each country enjoys superior terms of trade. 
E) each country has a more elastic demand for the imported goods.

Question 3

Assume that transportation costs are especially high for Widgets in the two- country,two- product Ricardian model,and Country A enjoys a comparative advantage in Widgets,then

Accepted Answer

A) country B must also enjoy a comparative advantage in Widgets. 
B) country B may end up exporting Widgets. 
C) country A will still export Widgets. 
D) trade may be impossible between the two countries. 
E) country A may switch to having a comparative advantage in the other good.

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

The pauper labor and the exploitation arguments

Trade between two countries can benefit both countries if

Assume that transportation costs are especially high for Widgets in the two- country,two- product Ricardian model,and Country A enjoys a comparative advantage in Widgets,then