Question 1

-Given the information in the table above, if wages were to double in Home, 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 2

Which of the following is most likely to be an untraded good in a Ricardian two-country, multi-good model?

Accepted Answer

A)  steel 
B)  textiles 
C)  haircuts 
D)  petroleum 
E)  telemarketer services 
A)  steel 
B)  textiles 
C)  haircuts 
D)  petroleum 
E)  telemarketer services

Question 3

The Ricardian model demonstrates that

Accepted Answer

A)  trade between two countries will benefit both countries. 
B)  trade between two countries may benefit both regardless of which good each exports. 
C)  trade between two countries may benefit both if each exports the product in which it has a comparative advantage. 
D)  trade between two countries may benefit one but harm the other. 
E)  trade between two countries always benefits the country with a larger labor force. 
A)  trade between two countries will benefit both countries. 
B)  trade between two countries may benefit both regardless of which good each exports. 
C)  trade between two countries may benefit both if each exports the product in which it has a comparative advantage. 
D)  trade between two countries may benefit one but harm the other. 
E)  trade between two countries always benefits the country with a larger labor force.

Question 4

-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 5

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 6

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

Accepted Answer

A)  not negate the logical basis for trade in the Ricardian model. 
B)  render the Ricardian model theoretically correct but practically useless. 
C)  negate the logical basis for trade in the Ricardian model. 
D)  negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners. 
E)  demonstrate the validity of the Ricardian model. 
A)  not negate the logical basis for trade in the Ricardian model. 
B)  render the Ricardian model theoretically correct but practically useless. 
C)  negate the logical basis for trade in the Ricardian model. 
D)  negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners. 
E)  demonstrate the validity of the Ricardian model.

Question 7

-Given the information in the table above, Home's opportunity cost of cloth 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 8

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 9

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 10

-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 11

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

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to

Accepted Answer

A)  France having a comparative advantage over Germany in ships. 
B)  France having a comparative disadvantage compared to Germany in autos and ships. 
C)  Germany having a comparative advantage over France in autos and ships. 
D)  France having no comparative advantage over Germany. 
E)  France should produce autos. 
A)  France having a comparative advantage over Germany in ships. 
B)  France having a comparative disadvantage compared to Germany in autos and ships. 
C)  Germany having a comparative advantage over France in autos and ships. 
D)  France having no comparative advantage over Germany. 
E)  France should produce autos.

Question 13

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.

Accepted Answer

If we were to combine the production pos

Question 14

If a production possibilities frontier is a straight line, then production occurs under conditions of

Accepted Answer

A)  increasing opportunity costs. 
B)  constant opportunity costs. 
C)  decreasing opportunity costs. 
D)  infinite opportunity costs. 
E)  uncertain opportunity costs. 
A)  increasing opportunity costs. 
B)  constant opportunity costs. 
C)  decreasing opportunity costs. 
D)  infinite opportunity costs. 
E)  uncertain opportunity costs.

Question 15

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 16

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) Argentina has an absolute advantage

Question 17

Which of the following has been confirmed by empirical tests of the Ricardian model?

Accepted Answer

A)  All predictions of the model for a multi-product, multi-country world are highly unrealistic. 
B)  The existence of nontraded goods results in a high degree of specialization among countries. 
C)  International trade has no impact on income distribution. 
D)  The unimportance of economies of scale as a cause of trade. 
E)  Companies tend to export goods in which they have a relatively high level of productivity. 
A)  All predictions of the model for a multi-product, multi-country world are highly unrealistic. 
B)  The existence of nontraded goods results in a high degree of specialization among countries. 
C)  International trade has no impact on income distribution. 
D)  The unimportance of economies of scale as a cause of trade. 
E)  Companies tend to export goods in which they have a relatively high level of productivity.

Question 18

-Given the information in the table above, if the Home economy suffered a meltdown, and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets 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 19

-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 20

In a two-product, two-country world, international trade can lead to increases in

Accepted Answer

A)  consumer welfare only if output of both products is increased. 
B)  output of both products and consumer welfare in both countries. 
C)  total production of both products but not consumer welfare in both countries. 
D)  consumer welfare in both countries but not total production of both products. 
E)  prices of both goods in both countries. 
A)  consumer welfare only if output of both products is increased. 
B)  output of both products and consumer welfare in both countries. 
C)  total production of both products but not consumer welfare in both countries. 
D)  consumer welfare in both countries but not total production of both products. 
E)  prices of both goods in both countries.

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

Which of the following is most likely to be an untraded good in a Ricardian two-country, multi-good model?

The Ricardian model demonstrates 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

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

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

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

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

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

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to

If a production possibilities frontier is a straight line, then production occurs under conditions of

Which of the following has been confirmed by empirical tests of the Ricardian model?

-Given the information in the table above, if the Home economy suffered a meltdown, and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

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

In a two-product, two-country world, international trade can lead to increases in

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

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

Which of the following is most likely to be an untraded good in a Ricardian two-country, multi-good model?

The Ricardian model demonstrates 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

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

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

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

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

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

In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to

If a production possibilities frontier is a straight line, then production occurs under conditions of

Which of the following has been confirmed by empirical tests of the Ricardian model?

-Given the information in the table above, if the Home economy suffered a meltdown, and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

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

In a two-product, two-country world, international trade can lead to increases in

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